Texas Labor Market Outperforming Nation
What happened
The Dallas Federal Reserve describes Texas's labor market as "almost kind of embarrassing for the rest of the U.S.," with robust employment gains reported through early 2026.
Why it matters
The Dallas Fed's forecast indicates a 1.1% increase in Texas jobs for 2026, translating to roughly 154,600 new positions. This follows a period of nearly flat job growth in 2025, where only about 10,700 jobs were added. The state's unemployment rate stood at 4.3% in December 2025. Several sectors are expected to drive this growth, including energy, financial services, and construction. The energy sector is adapting to changes with AI investments and data center construction creating demand for skilled workers. Construction is also rebounding, fueled by population growth and infrastructure projects, especially in data center and AI-related facilities. However, there are headwinds. Luis Torres, a senior business economist at the Dallas Fed, noted that high policy uncertainty made employers cautious about hiring. A federal crackdown on immigration has also constrained the labor supply. Slower population growth in Texas and low oil prices may also impact job growth.
Key numbers
- The Dallas Federal Reserve describes Texas's labor market as "almost kind of embarrassing for the rest of the U.S.," with robust employment gains reported through early 2026.
- The Dallas Fed's forecast indicates a 1.1% increase in Texas jobs for 2026, translating to roughly 154,600 new positions.
- This follows a period of nearly flat job growth in 2025, where only about 10,700 jobs were added.
- The state's unemployment rate stood at 4.3% in December 2025.
What happens next
- Several sectors are expected to drive this growth, including energy, financial services, and construction.
- Slower population growth in Texas and low oil prices may also impact job growth.
Sources
Quick answers
What happened in Texas Labor Market Outperforming Nation?
The Dallas Federal Reserve describes Texas's labor market as "almost kind of embarrassing for the rest of the U.S.," with robust employment gains reported through early 2026.
Why does Texas Labor Market Outperforming Nation matter?
The Dallas Fed's forecast indicates a 1.1% increase in Texas jobs for 2026, translating to roughly 154,600 new positions. This follows a period of nearly flat job growth in 2025, where only about 10,700 jobs were added. The state's unemployment rate stood at 4.3% in December 2025. Several sectors are expected to drive this growth, including energy, financial services, and construction. The energy sector is adapting to changes with AI investments and data center construction creating demand for skilled workers. Construction is also rebounding, fueled by population growth and infrastructure projects, especially in data center and AI-related facilities. However, there are headwinds. Luis Torres, a senior business economist at the Dallas Fed, noted that high policy uncertainty made employers cautious about hiring. A federal crackdown on immigration has also constrained the labor supply. Slower population growth in Texas and low oil prices may also impact job growth.
