Texas Employment Forecast

August 16, 2024

The Texas Employment Forecast* estimates jobs will increase 1.6 percent in 2024, with an 80 percent confidence band of 1.2 to 2.0 percent. The forecast is based on an average of four models that include projected national GDP, oil futures prices and the Texas and U.S. leading indexes. The forecast suggests 224,400 jobs will be added in the state this year, and employment in December 2024 will reach 14.2 million (Chart 1). Growth for the remainder of the year is expected to be 1.4 percent.

Texas employment decreased an annualized 1.2 percent in July after decreasing 0.6 percent in June. The June figure was revised upward.

"Texas employment in July was impacted by Hurricane Beryl as the state lost around 14,000 jobs. The Houston region bore the brunt of Beryl's winds and rain, which caused widespread power outages and contributed to the loss of 7,000 jobs. Still, employment growth was weak in other major regions not affected by the hurricane, and, in some cases, employment shrunk. Austin and Fort Worth registered declines in jobs, while in Dallas and San Antonio job growth was flat," said Luis Torres, Dallas Fed senior business economist. "Although it is difficult to distinguish the net effects of Hurricane Beryl on employment, job losses in sectors not affected by the hurricane, such as professional and business services and health and education jobs, point to a cooling in the job market."

The Texas Leading Index slightly decreased over the three months through July (Chart 2). Changes in the index components were mixed; decreases in average hours worked, well permits and the U.S. leading index as well as increases in the Texas value of the dollar were negative contributors. In contrast, the index was supported by increases in the Texas stock index, the help-wanted index and the real price of West Texas Intermediate oil, in addition to decreases in new claims for unemployment.

*The Texas Employment Forecast model was adjusted to control for the effects of Hurricane Beryl on the data.

Next release: September 20, 2024

Methodology

The Dallas Fed's Texas Employment Forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December.

The forecast is based on the average of four models. Three models are vector autoregressions for which Texas payroll employment is regressed on the lags of West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index. The fourth model is an autoregressive distributed lag model with regression of payroll employment on lags of payroll employment, current and lagged values of U.S. GDP growth and WTI oil prices, and Texas COVID-19 hospitalizations through March 2023. Forecasts of Texas payroll employment from this model also use forecasts of U.S. GDP growth from Blue Chip Economic Indicators and WTI oil price futures as inputs. All models include four COVID-19 dummy variables (March-June 2020).

For additional details, see dallasfed.org/research/forecast/.

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