The Lone Star State is gearing up to face a slowdown in job creation in 2024, contrasting the substantial gains experienced in recent years. As reported on February 10th by the Federal Reserve Bank of Dallas, Texas is projected to add nearly 284,000 jobs this year, marking a 2% rise from the previous year, which is more in tune with the state’s pre-pandemic job growth patterns. This anticipated performance suggests Texas is on track to see its employment figures touch 14.4 million by the end of the year, according to data from CBS Austin.
Despite this projected slowdown, Texas’ growth trajectory pleasantly surprised analysts last year, outdoing the nation’s average and placing fifth in number of jobs added amongst all U.S. states. "We’re cleared for landing, landing back to our long run trend rate of growth," Pia Orrenius, the Dallas Fed vice president and senior economist, was found to optimistically state in an interview by the Dallas Weekly. While the technology sector saw job losses, other industries, particularly oil and gas, have performed robustly, with the latter surpassing its pre-pandemic peaks last year.
Real estate, a sector significantly influenced by the pandemic, demonstrates a mixed landscape. Single-family home construction managed to remain above pre-pandemic levels in 2023, although the building permits issued for such homes notably dropped by more than 5%, as highlighted by CBS Austin. Conversely, the apartment rent market showed signs of cooling down, with a boom in apartment construction leading to a slowdown in rent hikes, particularly in urban areas like Austin and Dallas-Fort Worth.
Challenges, however, lie ahead as several factors could further complicate job growth prospects for Texas. The end of 2023 saw an unexpected uptick in inflation within the state, defying the national trend of continued decline, and sales tax revenue growth started to show a deceleration. This has raised concerns about reduced consumer spending. "Fears of a potential recession among business owners have waned, but many worry that geopolitical and domestic uncertainty surrounding the 2024 presidential election could dampen their business and harm the state's economy," Luis Torres, a Dallas Fed senior business economist, told the Dallas Weekly. Additionally, despite high return-to-office rates, Texas is still struggling with high office vacancies, injecting a sense of unpredictability into the commercial real estate sphere.
