Perryman: The Texas Economic Outlook 

Though certainly not immune to national and global issues (particularly with regard to tariff and immigration policies), Texas continues to display notable momentum. The state is emerging as an epicenter for the ongoing digital transformation, with semiconductor plants and their associated suppliers, data centers, crypto miners, and others choosing to locate in the state. Life sciences and other emerging industries are also seeing accelerated activity. Vast natural resources remain a catalyst to growth, and in addition to oil and natural gas, the state is also the leader in the next phase of energy development including renewables, new potential sources, and climate-oriented technologies.   

Thanks to these and other positive forces, net new jobs in Texas over the past year represent over 14% of the total national gain, even though the state’s share of total employment is only about 9%. Texas also continues to dominate the major corporate location and expansion landscape in the US with record-setting performance, and new projects are setting the stage for ongoing expansion. Strong population expansion also persists due to both a younger average age (and, thus, higher birth rates) and in-migration from other states and countries; an expanding population is an enormous resource and competitive advantage going forward.

In other good news, the Texas Legislature passed important bills to deal with some of the most pressing challenges facing the state, including, among others, public school finance and teacher pay (though much remains to be done), water supplies, rural health care, wildfire preparation, and electric power supplies and the stability of the grid. Economic growth would stall without adequate, reliable, and affordable electric power and other infrastructure, and the new legislation will help keep the momentum alive. Some significant issues require further attention, but progress was made.  

As a large economy and by far the top exporting state in the country, however, Texas bears more of the national burden associated with potential tariffs than any other state. We’ve looked at the potential Texas losses associated with various tariff proposals and found that the state would lose tens of billions in gross product each year and hundreds of thousands of jobs if substantial tariffs on imports from major trading partners are sustained. 

Our latest projections indicate that wage and salary employment will likely grow by almost 1.5 million net new positions, an increase of 1.89% per year from 2024 to 2029. Given the current levels of uncertainty on multiple fronts, the confidence intervals around these projections are wider than usual and growth will likely be somewhat backloaded to the later years of the forecast horizon. Even so, there is ample reason to believe that the state will be a center for growth for the foreseeable future. Stay safe!

Editor’s Note: The above guest column was penned by Dr. M. Ray Perryman, president and chief executive officer of The Perryman Group (www.perrymangroup.com). The Perryman Group has served the needs of over 3,000 clients over the past four decades. The above column appears in The Rio Grande Guardian International News Service with the permission of the author. Perryman can be reached by email via: shelia@perrymangroup.com.

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