Special Questions

Texas Manufacturing Outlook Survey

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

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

NOTES: 80 responses.

NOTES: 80 responses.

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.

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

• 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.

• 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.

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

NOTES: 236 responses.

NOTES: 237 responses.

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.

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

• 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.

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

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

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

• 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.

• 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.

• 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.

• 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.

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

NOTES: 39 responses.

NOTES: 39 responses.

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.

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

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.

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

• [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.

• 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.

• 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.

• 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.

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

• 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.

• 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.

• 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.

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

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

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

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

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

• 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.