Lackluster employment, slowing wage increases signal economic slowdown for Texas, Dallas Fed says

Flat employment growth, a slight increase in the unemployment rate and fewer employers raising wages are signs the Texas economy is slowing, economists at the Federal Reserve Bank of Dallas said in a new report . A possible upside, said Dallas Fed Vice President Pia Orrenius , is that the slowdown in economic activity may help tamp down the inflation that’s been stretching Texans’ budgets as prices rise. “While official statistics have yet to show a meaningful easing of price pressures in our region, our surveys suggest a rapidly increasing share of Texas companies are refraining from increasing prices,” she said in the report Thursday.

The report by Orrenius, a senior economist at the Dallas Fed, and Research Analyst Ana Pranger said the number of employed Texans held steady at about 13.5 million last month, while the state’s unemployment rate increased to 4.1 percent in August from from 4 percent in July. In the San Antonio-New Braunfels metro area, the rate slipped to 3.8 percent from 4 percent in July. About 75 percent of Texas firms either kept prices the same or lowered them from August to September, according to the report. Meanwhile, a smaller percentage of employers gave their employees raises in August than a month earlier. Only 38 percent of manufacturing firms and 29 percent of service companies boosted wages in August, the lowest monthly figures since spring 2021. Despite the slowdown, the report said Texas job growth is still expected to exceed 4 percent this year, which would double the state’s historical average growth rate of 2 percent a year. While the August numbers may signal a coming recession, Orrenius told the Texas Tribune it’s “far too early to say.” “We’re just seeing this begin, so we’re still not sure if it’s going to stick,” she said. “I think the September jobs numbers will tell us a lot.” She added the Federal Reserve’s recent string of interest rate increases aimed at curbing inflation is also contributing to the Texas slowdown.