Dallas Fed says Texas’ employment was flat last year, contradicting state narrative

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(The Center Square) – The Dallas Fed argues Texas’ employment for 2025 was “flat,” appearing to contradict state and federal employment data and claims made by the governor and state leaders.

“Texas employment was essentially flat in 2025,” Luis Torres, Dallas Fed senior business economist, said in an employment forecast. “Higher productivity suppressed labor demand, and slower immigration constrained supply. In addition, employers were more cautious about hiring as a result of high policy uncertainty. Job losses were observed across several sectors, including energy, manufacturing, government, information and professional and business services. Meanwhile, there were job gains in construction, education and health services, financial activities, and trade and transportation services.”

The Texas Leading Index dropped over a three-month period through December, “dragged down by declines in the real oil price, well permits, the U.S. leading index and the Texas stock index. Declines in the Texas value of the dollar and unemployment claims, and increases in the Texas help-wanted index and average weekly hours, contributed positively to the index,” he adds.

The Fed’s Texas Employment Forecast “indicates jobs will increase 1.1 percent in 2026, with an 80 percent confidence band.” The forecast is based on an average of four models the Fed uses to project U.S. gross domestic product, oil futures prices and the Texas and U.S. leading indexes. “The forecast implies 154,600 jobs will be added in the state this year, and employment in December 2026 will be 14.4 million,” it states.

It notes that Texas’ “employment grew 0.1 percent in 2025 after increasing by 1.6 percent in 2024. The state added only 10,700 jobs last year.”

The report appears to contradict claims made by Gov. Greg Abbott, the Texas Workforce Commission and state leaders, who tout Texas’ job records every month and year. 

Texas not only leads the U.S. in job growth but also in economic growth, month after month and year after year, The Center Square reported.

In December, Texas again broke its own jobs records and led the U.S. in job gains again last year, The Center Square reported.

“Texas is America’s jobs leader because Texas is where free enterprise flourishes and where hard work is rewarded,” Abbott said in a statement. “That is why Texas tops all states for business relocations and expansions. Job-creating businesses — large and small — invest with certainty in Texas and in our young, skilled, and growing workforce. With more Texans working than ever before, we begin a new year of boundless opportunity in Texas.”  

In 2025, Texas again added the most nonfarm jobs of any state in the U.S. and in December again broke its own records in three categories, The Center Square reported.

Texas broke its own records in December for having the most nonfarm jobs, the most Texans working, and the largest labor force in state history, according to the latest jobs data released by the Department of Labor and TWC.

Over the year, Texas gained 132,500 jobs from December 2024 to December 2025, more than any other state in the country, according to TWC data. Texas’ nonfarm growth rate of 0.9% outpaced the national growth rate by half a percentage point, it said.

Texas also reached a new high recording the largest labor force in state history of 15,964,000 in December. This is after 25,000 people entered the workforce over the month.

“This marks a new record-high level for the series,” the TWC said. “Over the year, Texas’ civilian labor force has added 236,300 people.”