Texas Economic Growth Takes a Breather

News Summary

Recent reports indicate a slowdown in Texas’s economic growth, as job numbers dip and construction contracts decline. While unemployment remains low, the effects of changing tariffs and foreign workforce issues add complexity to the state’s economic landscape. With inflation low and a forecasted boost in employment slightly below historical trends, a cautious outlook is warranted as Texas adapts to evolving challenges.

Texas Economic Growth Takes a Breather

In the bustling state of Texas, exciting times were once the norm. However, recent reports from the Federal Reserve Bank of Dallas suggest that the Lone Star State’s economy is slowing down. If you’re keeping an ear to the ground, you may have picked up on some of the subtle shifts happening across various sectors.

Job Market: A Rollercoaster Ride

First up is the employment scene, where Texas saw a 1.3% decline in jobs from May to June 2025. It’s a dip that didn’t come at the best of times, as it follows a healthier month where job growth was riding high at 2.5%. Year-to-date, job growth sits at 1.8%, still above the national average of 0.7%. While it’s encouraging to know we’re ahead of the game, the slowdown raises eyebrows and concerns.

The unemployment rate is down to 4.0%, which is surely a good sign. Businesses are hanging onto their current workforce amidst the turbulence—something noteworthy in these unpredictable economic conditions. However, a troubling trend has surfaced: many Texas companies are facing challenges due to a decrease in foreign-born workers. This might stem from changing immigration policies, which affects not only the workforce but also the vitality and diversity that many industries thrive on.

Construction Dilemmas

26% over the last five months. It’s hard to ignore the strains on residential construction, with contracts down 7%, indicating some headwinds in the housing market. Multifamily construction, while up by 4% in June, shows a marked reduction from 7% growth in May, hinting at a decline in overall building confidence.

Part of the hesitation among builders can be linked to rapidly changing tariffs. This uncertainty has made many reconsider their projects, resulting in pauses or outright cancellations. Builders seem to be holding back, weighing their options before diving into new endeavors.

Inflation: The Gentle Giant

1% year-over-year, which is somewhat unusual in today’s economy. While consumers may appreciate lower price increases, low inflation could also hint at decreased consumer spending. It’s a catch-22 situation that leaves both shoppers and businesses in a tight spot.

2.4% to 17.5%, prices haven’t increased in the expected manner. This might suggest companies are gearing up for tariff impacts by stockpiling inventory, preparing for whatever comes next. Some international businesses are even considering leaving the U.S. due to the rising costs associated with these tariffs, a sign that the play field is becoming increasingly challenging.

What Lies Ahead?

1.7% boost in Texas employment for 2025, slightly lower than the long-standing trend of 2%. While the overall economic sentiment is softening, it’s essential to recognize that we are not facing a complete downturn. It appears we’re in a transitional phase, adapting to new realities and constraints.

Deeper Dive: News & Info About This Topic

• KDH News: Texas Economic Indicators
• San Antonio Express-News: Texas Economy Forecast
• ABC 13: Chances of a Recession
• Wikipedia: Economy of Texas
• Houston Chronicle: Texas Oil Price Drop

Author: STAFF HERE HOUSTON TX WRITER

HOUSTON STAFF WRITER The HOUSTON STAFF WRITER represents the experienced team at HEREHouston.com, your go-to source for actionable local news and information in Houston, Harris County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Houston Livestock Show and Rodeo, Art Car Parade, and Chevron Houston Marathon. Our coverage extends to key organizations like the Greater Houston Partnership and Houston Area Urban League, plus leading businesses in energy and healthcare that power the local economy such as ExxonMobil, Schlumberger, and Houston Methodist. As part of the broader HERE network, including HEREAustinTX.com, HERECollegeStation.com, HEREDallas.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.