Relatively high oil prices and the data center buildout in the state are providing a boost to Texas’ economic activity and job growth, Luis Torres, a senior economist at the Dallas Fed says.
David Goldman/The Associated Press
Early this year, on the heels of a rough 2025, researchers at the Dallas Fed projected that in 2026 the state would add jobs at a rate of just over 1% — or roughly half of Texas’ traditional growth rate.
But more than halfway through the year things are looking up: The latest projection from the bank’s modeling system, released late last week, shows Texas employment is now on pace to expand this year by 2%, in line with Texas’ long-run average.
“Texas job growth has been surprisingly strong in light of labor supply constraints,” Luis Torres, a senior economist at the bank, said in a statement. “The data center buildout and relatively high oil prices continue to provide a boost to state economic activity and job growth.”
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The rosier full-year projection comes on the back of robust June jobs numbers: For the month, Texas added over 42,000 jobs, representing an employment growth rate of an annualized 3.5%, according to the bank’s figures — the highest monthly increase in nearly two years.
The jobs gains came largely from professional business services, construction and trade and transportation, which far outweighed losses in education, health services and government. Leisure and hospitality also saw a bump, which Torres attributed to increased activity from the World Cup. While the tournament was widely expected to provide a short-term boost to the sector — including in soccer-mad D-FW — analysts have also stressed that its long-term economic impact was likely to be minimal.
“It’s a modest bump,” Barbara Denham, an economist at Oxford Economics who authored a report on the tournament’s economic impact, previously told The Dallas Morning News. “It’s not as significant as people think,” she added, “because people come for the games, spend a lot of money, then they leave.”
Greater Austin notched the highest monthly growth rate, at 5.8%, while greater Fort Worth added jobs at a rate of 3.9% and greater Dallas added jobs at a rate of 3.7%. Houston saw slower growth, while San Antonio reported a net decline.
The Dallas Fed also revised May jobs gains upward slightly, to 1.3%. Except for February, when job growth in the state was nearly flat, throughout 2026 Texas has mostly posted solid jobs gains, including a 3.4% growth rate in March and 2.2% growth rate in April, according to the Dallas Fed’s latest figures.
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That’s a marked change from 2025, when Texas experienced net job losses for several months and other months of nearly flat growth. After revisions, the state ended up with 0.7% jobs growth for the year, down from 1.7% in 2024 and 2.3% in 2023. Economists attributed the slowdown to widespread macroeconomic uncertainty, including from the Trump administration’s tariffs and flaring tensions in the Middle East; the administration’s immigration crackdown, which dramatically reduced Texas’ labor supply; and the state’s struggling oil and gas industry.
This year, the state’s economy has proven surprisingly resilient even amid the war in Iran and continued labor supply issues. Torres and other economists have cited Texas’ AI construction boom as well as its strong overall business climate, which continues to attract both companies and residents, particularly to D-FW.
“We haven’t changed the rules of the game here in Texas, right?” Torres recently told The News. “Pro-business, low taxes. All these things are still working in our favor.”
The bank’s 2026 Texas jobs forecast, which updates monthly, is based on an average of four models that incorporate a range of economic data, including on projected U.S. GDP growth, oil prices and Texas unemployment figures. Torres was not available to speak on the latest forecast because of the Federal Reserve’s media black out period ahead of next week’s Federal Open Market Committee (FOMC) meeting, where the central bank’s governors set monetary policy and interest rates.