Texas Employment Forecast

The Texas Employment Forecast indicates jobs will increase 1.9 percent in 2025, with an 80 percent confidence band of 1.2 to 2.6 percent. The forecast is based on an average of four models that includes projected U.S. gross domestic product, oil futures prices and the Texas and U.S. leading indexes. In addition, this forecast utilizes Texas employment data that have been adjusted to include anticipated downward revisions by the Bureau of Labor Statistics. The forecast implies 275,000 jobs will be added in the state this year, and employment in December 2025 will be 14.5 million (Chart 1).

Texas employment grew an annualized 3.4 percent in January, adding 39,700 jobs. “January job growth was strong and broad based, led by increases in the energy and education and health sectors. Only employment in the information sector dropped,” said Jesus Cañas, Dallas Fed senior business economist. “Additionally, employment rose in all major metropolitan areas of the state, with Houston outpacing the other major metros,” he added.

With the release of the January data, the Texas Workforce Commission included its annual benchmark, which resulted in a downward revision of 2024 employment growth from 1.7 percent to 1.5 percent.

The Texas Leading Index rose over the three months through January (Chart 2). Changes in the index components were mixed; increases in the help wanted index, Texas Stock Index, average weekly hours, real oil price and a decline in unemployment claims were positive contributors. Declines in the U.S. leading index and well permits and an increase in the Texas value of the dollar dragged on the index.

Next release: March 28, 2025

Methodology

The Dallas Fed’s Texas Employment Forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December.

The forecast is based on the average of four models. Three models are vector autoregressions for which Texas payroll employment is regressed on the lags of West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index. The fourth model is an autoregressive distributed lag model with regression of payroll employment on lags of payroll employment, current and lagged values of U.S. GDP growth and WTI oil prices, and Texas COVID-19 hospitalizations through March 2023. Forecasts of Texas payroll employment from this model also use forecasts of U.S. GDP growth from Blue Chip Economic Indicators and WTI oil price futures as inputs. All models include four COVID-19 dummy variables (March–June 2020).

For additional details, see dallasfed.org/research/forecast/.