Texas Economic Outlook Remains Robust

The Texas economy continues to perform, even with national headwinds. “Despite stubborn inflation growth and overall economic uncertainty, the Texas economy has remained robust,” stated a monthly economic report from the Texas Real Estate Research Center.

Employment has continued to increase, and the Texas economy created 29,500 new jobs in December. As a result, the unemployment rate dropped to 3.9 percent.

Austin’s unemployment rate came in the lowest of the major metros with 2.9 percent. Austin’s trade and transportation industry added almost 3,000 workers in December. Houston had the highest unemployment with 4.3 percent, which the report attributed to the oil and gas industry. The West Texas Intermediate Crude oil spot price declined to $76.44 in December, the lowest since December 2021. Oil production increased over the previous month, as did active rig count.

Texas’ labor force expanded 2.3 percent, following a net influx of 330,700 workers who moved from out of state in the past year. Initial unemployment claims, however, were up in November and December. The Dallas Fed predicts 1.4-percent growth for Texas’ annual employment in 2023. Wage growth did not overcome inflation for the month.

Home sales were down almost 30 percent comparing December 2022 to December 2021. Compared to the previous month, Austin and Dallas sales were down 4.4 percent. Construction on single-family homes remained flat, while construction payroll added 700 jobs, reversing a four-month trend. Construction values were down six percent month over month for the fourth month in a row. Mortgage rates moderated in December 2022.

For exports, “The Texas trade-weighted value of the dollar was relatively high, meaning the cost of exporting goods is rising for foreign entities, diminishing values.”