The Texas economy exceeded expectations in 2023 after earlier worries of a national recession, according to an analysis by the Federal Reserve Bank of Dallas.
Why it matters: Economists had projected a soft landing for Texas in 2023, predicting it would avoid a major economic downturn even if the national economy took a hit.
The big picture: The Texas labor force grew at its fastest pace in decades last year and outpaced growth nationwide, Dallas Fed senior economist Pia Orrenius said at a recent economic outlook event.
- The state's job growth is expected to cool this year to pre-pandemic figures. "We're cleared for landing," Orrenius said.
State of play: Texas had the country's fifth highest job growth by percentage last year. Nevada was first.
- Employment was up 3.1% in Texas, compared to 2% nationwide.
- The state's information sector, where many tech companies had layoffs, was the only sector that recorded job losses last year.
Zoom in: Brownsville-Harlingen area earned the top spot in job growth, with 5% growth.
- The Dallas-Fort Worth area recorded 3% growth.
- Job growth in top-performing Austin slowed to 2.9% in 2023 because of turmoil in the tech industry.
Of note: Construction in Texas remained robust in 2023, but overall sales of single-family homes declined amid high interest rates.
- And, builders are making smaller homes than before to reduce their construction costs and make sales, Orrenius said.
Threat level: Texas firms surveyed by the Dallas Fed in December listed geopolitical worries and uncertainty around the upcoming U.S. elections as their primary concerns over the next six months.
- They were also less concerned about a potential recession than in 2022.
What's next: The Fed projects job growth in the state will cool to around 2% this year.
Reality check: These are just projections. Recession concerns could return, the costs of goods could continue increasing, and consumers could end up spending less than expected this year.
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