Outlook for Texas Economy in 2023: Slower Growth but Resilience in Challenging Times

📈 The Texas economy showed signs of slowing in 2022, but still experienced growth in employment, particularly in the energy sector.

🛣️ The forecast for 2023 indicates below-trend growth but does not predict a recession. However, risks to the outlook remain on the downside.

🌆 Major metropolitan areas in Texas, such as Austin, Houston, and Dallas-Fort Worth, had broad-based job growth in 2022.

📊 Labor shortages in smaller cities can lead to lower job growth.

🔍 Benchmark revisions in employment data led to downward revisions in job growth in Texas.

📉 Economic activity and housing market growth declined in 2022.

📊 Austin and Dallas experienced significant declines in home prices after experiencing a surge during the pandemic, but homeowners still have considerable equity.

💳 Loan volumes in the housing industry, including residential real estate, consumer loans, and commercial real estate, are declining due to weak demand and tighter credit standards.

🏢 Office markets, particularly in Austin, have been heavily impacted by the work-from-home trend, resulting in high office vacancies.

⛽️ Energy production in Texas has rebounded, but its impact on economic activity is not as significant as it used to be.

💰 Inflation in Texas has shown declines in recent months, but remains above the target rate, with the core inflation rate being a concern due to wage growth.

Wage growth in Texas has been decreasing but is still high.

The job growth forecast for Texas in 2023 is 1.4 percent, indicating a soft landing.

The primary concerns for businesses in Texas are a potential recession and higher labor costs.

Inflation erodes the purchasing power of paychecks and is a concern for households in Texas and the nation.

If there is a U.S. recession, Texas may or may not be impacted depending on the severity of the recession, but it typically follows the nation into a recession.

The real estate market, particularly the single-family home market, is experiencing a decline in sales and prices due to interest rate increases.

🏢 Despite initial predictions, Texas had a similar ability to work from home as the national average during the pandemic.

🌾 The agricultural sector in Texas experienced significant crop failures due to a drought, leading to increased input prices and challenges for producers.

🚚 Migration to Texas has been a significant factor contributing to its economic growth, but it may taper off in the future due to demographic trends and rising cost of living.

🎓 Efforts are being made to promote educational attainment in Texas, with a focus on community colleges and alternative credentials for workforce development.

👉 Texas community colleges are different in a unique way and the state is considering reforms to the community college system.

🔍 Texas community colleges have strong partnerships with employers and focus on preparing students for the labor market through certificate programs and career education.

💼 There is a lack of financial aid for workforce or CTE students, but Texas is exploring ways to provide grants and subsidies for these programs to help students complete them quickly and enter the workforce.

🌍 Different regions of Texas experience the economy differently, with rural areas facing challenges of population decline while urban areas see growth. The pandemic has led to some migration into medium-sized cities, offering potential opportunities for economic growth.