.<\/strong><\/p>\nAll signs point to a slowdown of the Texas economy as job growth slows, construction declines and inflation ticks up, according to a Monday report by the Federal Reserve Bank of Dallas.<\/p>\n
The report on the Fed\u2019s recent Texas Business Outlook Surveys \u2014 recurring surveys of Texas business executives across industries \u2014 was published as President Donald Trump attempts to reshape the U.S. economy through aggressive immigration and trade policies through the first six months of his second term in office.<\/p>\n
Texas industries rely heavily on immigrants to fill jobs and on international trade to sell their goods. Uncertainty surrounding Trump\u2019s tariffs is giving investors pause and increasing costs for consumers, while tough immigration enforcement is affecting the ability of businesses to recruit and retain employees, according to the report.<\/p>\n
\u201cCertainly from the private sector, this volatility obviously creates uncertainty,\u201d said Ed Hirs, an economist and energy fellow at the University of Houston. \u201cI would delay any investments, and really anything I\u2019m doing. It\u2019s pretty clear the economy is on a path to recession. It\u2019s pretty clear the economy is on a path to inflation. The numbers are there.\u201d<\/p>\n
Job growth dropped by 1.3% month-over-month in June, and year-to-date job growth was 1.8%, according to the report.<\/p>\n
Immigration enforcement may be contributing to the slowdown in the job market, as surveyed businesses reported workforce disruptions caused by changes to immigration policy, according to the report.<\/p>\n
Ray Perryman, a longtime Texas economist, said as much as half of the agricultural workforce, 40% of construction workers, and 30% of hospitality workers are undocumented immigrants. It is difficult to gather data on undocumented workers, but the strict immigration policy is almost certainly an impact on the labor force, Perryman said.<\/p>\n
\u201cIf you want to build anywhere, grow anywhere or go anywhere, you really need these folks,\u201d Perryman said.<\/p>\n
The state\u2019s economy remains resilient compared to other states. Texas\u2019 slowing rate of job growth is still higher than the national average of 0.7% month-over-month in June, and the state\u2019s unemployment rate continued to decline to 4%.<\/p>\n
Luis Torres, a senior business economist with the Dallas Fed and author of the report, said the diversity of the state\u2019s economy is its strength, allowing it to weather economic downturns better than the nation as a whole.<\/p>\n
\u201cWe have all of these things that are in favor of the Texas economy\u2026 and that gives way to higher levels of economic growth than the rest of the country,\u201d Torres said.<\/p>\n
Tariff-driven inflation has not skyrocketed like many economists in opposition to Trump\u2019s trade policy predicted at the start of his term, but the report cited data indicating what \u201ccould be the beginning of tariff pass-through.\u201d<\/p>\n
The Texas consumer price index increased in May after falling for much of last year and through the start of 2025, according to the report. The core consumer price index, which excludes the volatile prices of food and energy, rose 1.1%.<\/p>\n
While the report said the inflation level is low, it called the lack of significant tariff-driven price increases \u201cconcerning and puzzling.\u201d The nation’s effective tariff rate has risen to 17.5% from 2.4% at the beginning of the year. While businesses may decide not to pass on the entire cost of tariffs to consumers, \u201cthey will likely pass on some,\u201d according to the report.<\/p>\n
The report speculated that consumers simply are not buying as much, causing businesses to avoid hiking prices over fears of losing customers. Companies stockpiling goods throughout the winter and spring ahead of expected tariff increases may also be allowing businesses to absorb some of the increased costs in the short term, according to the report.<\/p>\n
At the same time, construction is decreasing across the state, with construction contract values dropping 26% from a recent peak in January. The housing market is also weakening, with a 7% drop in value since January, according to the report.<\/p>\n
The report cites the Association of General Contractors of America\u2019s findings in June that uncertainty around trade is driving the cancellation or delay of new construction contracts.<\/p>\n
\u201cA pullback in many types of private nonresidential projects, as well as a sharp drop in homebuilding, contributed to the latest drop in construction spending,\u201d Ken Simonson, chief economist of the Associated General Contractors of America, said in a news release. \u201cEver-changing announcements about tariffs on key construction inputs, along with potential retaliatory measures by U.S. trading partners, are making owners hesitant to commit to new projects.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Increasing tariffs on foreign goods and the impact of deportations on the workforce are cited as job growth…\n","protected":false},"author":3,"featured_media":146613,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5135],"tags":[5229,1596,358,3187,67,586,132,5230,68,2969],"class_list":{"0":"post-146612","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-dallas","8":"tag-america","9":"tag-dallas","10":"tag-texas","11":"tag-tx","12":"tag-united-states","13":"tag-united-states-of-america","14":"tag-unitedstates","15":"tag-unitedstatesofamerica","16":"tag-us","17":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115030335449338821","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/146612","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=146612"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/146612\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/146613"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=146612"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=146612"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=146612"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}