Surveys

Special Questions

March 31, 2025

Special Questions

For this month’s survey, Texas business executives were asked supplemental questions on wages, prices, outlook concerns and government spending. Results below include responses from participants of all three surveys: Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey.

Texas Business Outlook Surveys

Data were collected March 18–26, and 329 Texas business executives responded to the surveys.

1. What percent change in wages, input prices and selling prices did your firm experience over the past 12 months, and what do you expect over the next 12 months?

	June '24		Sept. '24		Dec. '24		March '25
	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)
Wages	4.9	3.5	4.4	3.7	4.3	3.9	3.8	3.4
Input prices (excluding wages)	4.9	3.7	4.1	3.2	4.0	3.6	4.1	4.3
Selling prices	3.2	2.8	3.0	2.7	2.5	3.1	2.5	3.1

NOTES: 283 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

2. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Dec. '23	Mar. '24	June '24	Sept. '24	Dec. '24	Mar. '25
Level of demand/potential recession	45.6	42.0	44.9	47.6	33.7	50.0
Domestic policy uncertainty	31.1	40.5	37.7	49.2	36.1	44.6
Input costs/inflation	34.5	30.2	34.4	27.7	35.2	35.8
Geopolitical uncertainty	21.4	17.2	19.8	22.5	25.0	27.2
Taxes and regulation	18.8	24.5	22.5	29.9	22.9	20.6
Labor shortages/difficulty hiring	27.6	25.4	23.4	21.2	24.4	18.4
Labor costs	37.9	34.4	33.2	28.9	28.9	18.0
Cost of credit/interest rates	27.9	26.3	26.3	19.3	22.0	17.4
Supply-chain disruptions	9.7	8.5	7.8	10.3	12.0	15.8
Other	2.6	2.7	2.4	2.3	6.6	8.9
None	2.8	4.2	4.2	2.6	2.4	1.9

NOTES: 316 responses.

3. Do you expect changes in government spending to affect your business this year?

	Mar. '25 (percent)
No	38.2
Yes, a direct negative impact	18.3
Yes, an indirect negative impact	17.4
Yes, a direct positive impact	2.2
Yes, an indirect positive impact	7.3
Don’t know	16.7

NOTES: 317 responses.

3a. In what way(s) do you expect this negative impact to affect your business? Please select all that apply.

	March '25 (percent)
Reduced production/revenue/sales	77.0
Reduced capital expenditures	27.4
Layoffs	26.5
Reduced hiring	23.0
Supply-chain disruptions	22.1
Higher selling prices	17.7
Lower selling prices	14.2
Other	10.6

NOTES: 113 responses. This question was only posed to those indicating a negative impact in question 3.

The following question was posed to those indicating a positive impact in question 3.

3b. Please specify.

Responses can be found on the individual survey Special Questions results pages, accessible by the tabs above.

Survey respondents were given the opportunity to also provide comments, which can be found in the Comments tab above.

Texas Manufacturing Outlook Survey

Data were collected March 18–26, and 81 Texas manufacturers responded to the survey.

1. What percent change in wages, input prices and selling prices did your firm experience over the past 12 months, and what do you expect over the next 12 months?

	June '24		Sept. '24		Dec. '24		March '25
	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)
Wages	4.4	3.3	4.1	3.4	4.0	3.4	3.6	3.2
Input prices (excluding wages)	4.9	3.4	3.6	2.9	3.8	3.7	4.5	4.9
Selling prices	3.7	3.0	2.8	2.7	2.0	3.3	2.0	3.8

NOTES: 72 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

2. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Dec. '23	Mar. '24	June '24	Sept. '24	Dec. '24	Mar. '25
Level of demand/potential recession	45.6	52.5	52.4	63.2	37.5	50.0
Input costs/inflation	36.7	33.8	30.5	28.9	37.5	43.8
Domestic policy uncertainty	38.9	46.3	41.5	56.6	45.0	40.0
Geopolitical uncertainty	25.6	22.5	23.2	27.6	35.0	30.0
Taxes and regulation	24.4	23.8	30.5	31.6	16.3	23.8
Labor shortages/difficulty hiring	25.6	17.5	25.6	14.5	22.5	18.8
Supply-chain disruptions	15.6	7.5	13.4	19.7	20.0	17.5
Labor costs	32.2	28.8	26.8	26.3	25.0	15.0
Cost of credit/interest rates	21.1	20.0	19.5	13.2	13.8	10.0
Other	3.3	0.0	2.4	1.3	8.8	15.0
None	0.0	2.5	2.4	0.0	2.5	2.5

NOTES: 80 responses.

3. Do you expect changes in government spending to affect your business this year?

	Mar. '25 (percent)
No	40.0
Yes, a direct negative impact	13.8
Yes, an indirect negative impact	13.8
Yes, a direct positive impact	1.3
Yes, an indirect positive impact	12.5
Don’t know	18.8

NOTES: 80 responses.

3a. In what way(s) do you expect this negative impact to affect your business? Please select all that apply.

	March '25 (percent)
Reduced production	68.2
Reduced capital expenditures	45.5
Supply-chain disruptions	36.4
Layoffs	27.3
Reduced hiring	22.7
Higher selling prices	22.7
Lower selling prices	13.6
Other	13.6

NOTES: 22 responses. This question was only posed to those indicating a negative impact in question 3.

The following question was posed to those indicating a positive impact in question 3.

3b. Please specify.

Primary metal manufacturing

An increase in defense spending will generate demand for our products.

Machinery manufacturing

It depends whether Congress can codify these DOGE [Department of Government Efficiency] findings into actual legislation to prevent future mass fraud.
Less spending on bureaucrats equals less interference equals more business. More spending on defense equals more business.
Wasteful spending cuts may reduce income tax rates, bring down inflation and reduce interest rates.

Transportation equipment manufacturing

As majority shareholder in an LP [limited partnership], I am hoping Congress will reduce the highest tax bracket(s). In low-profit-margin businesses, this would allow shareholders to leave more money in the business to purchase capital equipment.

Texas Service Sector Outlook Survey

Data were collected March 18–26, and 248 Texas business executives responded to the survey.

1. What percent change in wages, input prices and selling prices did your firm experience over the past 12 months, and what do you expect over the next 12 months?

	June '24		Sept. '24		Dec. '24		March '25
	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)
Wages	5.0	3.6	4.6	3.9	4.5	4.1	3.8	3.5
Input prices (excluding wages)	4.9	3.8	4.4	3.4	4.0	3.5	4.0	4.1
Selling prices	3.0	2.7	3.1	2.7	2.6	3.0	2.7	2.9

NOTES: 211 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

2. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Dec. '23	Mar. '24	June '24	Sept. '24	Dec. '24	Mar. '25
Level of demand/potential recession	45.6	38.6	42.5	42.6	32.5	50.0
Domestic policy uncertainty	28.4	38.6	36.5	46.8	33.3	46.2
Input costs/inflation	33.7	29.1	35.7	27.2	34.5	33.1
Geopolitical uncertainty	19.9	15.5	18.7	20.9	21.8	26.3
Cost of credit/interest rates	30.3	28.3	28.6	21.3	24.6	19.9
Taxes and regulation	16.9	24.7	19.8	29.4	25.0	19.5
Labor costs	39.8	36.3	35.3	29.8	30.2	19.1
Labor shortages/difficulty hiring	28.4	27.9	22.6	23.4	25.0	18.2
Supply-chain disruptions	7.7	8.8	6.0	7.2	9.5	15.3
Other	2.3	3.6	2.4	2.6	6.0	6.8
None	3.8	4.8	4.8	3.4	2.4	1.7

NOTES: 236 responses.

3. Do you expect changes in government spending to affect your business this year?

	Mar. '25 (percent)
No	37.6
Yes, a direct negative impact	19.8
Yes, an indirect negative impact	18.6
Yes, a direct positive impact	2.5
Yes, an indirect positive impact	5.5
Don’t know	16.0

NOTES: 237 responses.

3a. In what way(s) do you expect this negative impact to affect your business? Please select all that apply.

	March '25 (percent)
Reduced revenue	79.1
Layoffs	26.4
Reduced hiring	23.1
Reduced capital expenditures	23.1
Supply-chain disruptions	18.7
Higher selling prices	16.5
Lower selling prices	14.3
Other	9.9

NOTES: 91 responses. This question was only posed to those indicating a negative impact in question 3.

The following question was posed to those indicating a positive impact in question 3.

3b. Please specify.

Pipeline transportation

DOGE cuts may help agencies focus on priority items, and the general tone is more supportive to the energy sector.

Credit intermediation and related activities

The simple answer is deregulation and reduced taxes.
Regulation on our business could be less restrictive.
Reduction of taxes and regulation will result in an expansion of the U.S. economy.

Securities, commodity contracts, and other financial investments and related activities

Spending cuts will upend the financial markets, making our services more attractive.

Insurance carriers and related activities

We are hopeful that reduced government spending will improve interest rates.

Real estate

Reduced interest rates.
If there is more disposition activity, it will increase opportunities for more contracting.

Rental and leasing services

When the government puts money in the economy, some of it trickles down to us, primarily through entities like TxDOT [Texas Department of Transportation] or county or city equipment purchase or rental.

Management of companies and enterprises

A lessened regulatory burden on commercial banks’ ability to do business should result in cost savings. Banks struggle to cover the increasing costs of heavy regulatory burdens.

Administrative and support services

Since we perform our services in the military sector, any uptick in spending will be a positive for our numbers. Our biggest fear with this is the supply-chain issues that will become pronounced if the tariff threat becomes reality.

Food services and drinking places

We shouldn’t have to carry the weight of the government.

Texas Retail Outlook Survey

Data were collected March 18–26, and 43 Texas retailers responded to the survey.

1. What percent change in wages, input prices and selling prices did your firm experience over the past 12 months, and what do you expect over the next 12 months?

	June '24		Sept. '24		Dec. '24		March '25
	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)	Past 12 months (percent)	Next 12 months (percent)
Wages	4.5	2.6	4.6	3.8	4.3	2.9	3.7	3.4
Input prices (excluding wages)	4.4	2.6	3.4	2.5	3.5	3.3	4.1	4.7
Selling prices	2.4	1.8	2.0	2.3	1.3	2.6	3.1	3.9

NOTES: 37 responses. Shown are averages, calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

2. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Dec. '23	Mar. '24	June '24	Sept. '24	Dec. '24	Mar. '25
Input costs/inflation	34.5	34.0	37.7	26.9	38.3	46.2
Level of demand/potential recession	49.1	36.0	45.3	48.1	42.6	43.6
Domestic policy uncertainty	29.1	34.0	28.3	42.3	31.9	33.3
Supply-chain disruptions	12.7	16.0	7.5	13.5	17.0	25.6
Labor shortages/difficulty hiring	30.9	34.0	18.9	25.0	27.7	23.1
Geopolitical uncertainty	20.0	14.0	15.1	19.2	25.5	23.1
Cost of credit/interest rates	40.0	30.0	45.3	26.9	25.5	17.9
Taxes and regulation	12.7	26.0	11.3	26.9	14.9	17.9
Labor costs	27.3	30.0	34.0	23.1	21.3	15.4
Other	0.0	2.0	1.9	0.0	6.4	5.1
None	1.8	4.0	3.8	3.8	2.1	2.6

NOTES: 39 responses.

3. Do you expect changes in government spending to affect your business this year?

	Mar. '25 (percent)
No	46.2
Yes, a direct negative impact	10.3
Yes, an indirect negative impact	17.9
Yes, a direct positive impact	5.1
Yes, an indirect positive impact	0.0
Don’t know	20.5

NOTES: 39 responses.

3a. In what way(s) do you expect this negative impact to affect your business? Please select all that apply.

	March '25 (percent)
Reduced sales	72.7
Higher selling prices	54.5
Layoffs	36.4
Reduced hiring	36.4
Supply-chain disruptions	27.3
Reduced capital expenditures	18.2
Lower selling prices	0.0
Other	9.1

NOTES: 11 responses. This question was only posed to those indicating a negative impact in question 3.

The following question was posed to those indicating a positive impact in question 3.

3b. Please specify.

Food and beverage stores

It is possible that less taxes will be paid due to overtime tax rules legislation.

Nonstore retailers

I think the Trump administration will cut waste and spending and help us immensely in the long term. But there may be some short-term negative economic impacts of decreased government spending, and terminated government employees will have to find employment in the private sector.

Special Questions Comments

These comments have been edited for publication.

Texas Manufacturing Outlook Survey

Computer and electronic product manufacturing

A recession would have a negative impact on business. The problem may be worse as prices go up due to tariff increases.

Paper manufacturing

[Changes in government spending are] expected to affect overall demand. But they’re necessary, as the country has been living on the federal credit card too long.

Printing and related support activities

There is uncertainty of supply, and the impact from the administration’s policy is our greatest concern. It is not a small concern, as it puts all other concerns as secondary issues.

Texas Service Sector Outlook Survey

Management of companies and enterprises

We are a bank, our net interest margin last year was down as our deposit rates were up and prime loan rates down. This year our margins should be a little better. Our investment cash flow and reinvestment rates are better.

Professional, scientific and technical services

Partners servicing clean energy clients supported by federal grants are scaling back —rapidly. Uneconomic projects are being shelved.
Most of our work is in the private sector. It is our hope that the reduction in government spending reduces interest rates. We are also hopeful that a reduction in regulations spurs private sector growth.
Our clients are laying off people, such as our non-profit clients who relied on USAID money and others.
We are a CPA firm that has ongoing dealings with the IRS, SBA and Social Security Administration. The government personnel cutbacks will significantly affect our ability to address issues with these agencies.
The slashing of so many programs and funding around anything deemed DE&I will cut off a portion of our business.
Unfortunately, the federal workforce reduction is getting rid of the good and the bad, high performers as well as the low performers. We see a lot of good workers, especially those who have valuable experience and institutional knowledge, leaving the government. With uncertainly on the rise, we are lowering our projections and are concerned that private sector consultants will be assuming additional risks.
Uncertainty is affecting our investment decisions. Having no idea what tomorrow will bring (on a daily basis) is not conducive to capital investment.

Rental and leasing services

We think uncertainty about tariffs has given our suppliers an excuse to raise their prices.

Administrative and support services

We are seeing more emotional reactions as opposed to real, substantive financial impact to the chaotic and shifting federal policy decisions. It’s a relatively dramatic change from what we were seeing in early January 2025.

Real estate

Many of our poorest apartment residents rely on charities to subsidize their rent. As soon as the charities were cut off, our rental income dropped, and more evictions are becoming necessary.

Insurance carriers and related activities

At the end of last year, we saw an uptick in the small businesses we service. They began buying insurance again and hiring more employees instead of cutting. We believe a number of small businesses won't weather the storm ahead and others will be dropping employees.

Securities, commodity contracts and other financial investments and related activities

Reduced government spending and policy uncertainty will likely affect our clients, which will reduce spending and investment.

Credit intermediation and related activities

We are concerned about the possible impacts digital money systems may have on traditional banking.

Support activities for transportation

Tariffs are still a major concern, and also if government cancels the Office of Refugee Resettlement budget we would be highly affected.

Accommodation

We have already experienced a large government conference cancelation due to the news coming out of D.C.

Texas Retail Outlook Survey

Motor vehicle and parts dealers

Tariff talks have caused a lot of uncertainty among our manufacturers, thus giving us concern over future pricing and vehicle availability.

Merchant wholesalers, nondurable goods

With department cuts to the USDA, it could potentially make it harder to obtain the export inspections necessary to export beef, chicken, pork and dairy (cheese primarily). Also, indirectly, we are aware that the USDA subsidizes school lunches and other large buys of agriculture goods. If the USDA is no longer going to spend that money, there could potentially be an over-supply of those goods and raw materials. This could, in turn, drive down the cost of those goods. With large-scale consolidation in the grocery industry, it will be interesting to see how much competition will actually drive down the cost to the consumer.

Questions regarding the Texas Business Outlook Surveys can be addressed to Emily Kerr at emily.kerr@dal.frb.org.