Dallas Fed: Texas employment forecast softens

August 21, 2026

The Texas Employment Forecast released by the Federal Reserve Bank of Dallas indicates jobs will increase 1.7 percent in 2026, with an 80 percent confidence band of 1.3 to 2.1 percent.

That would be a decrease from the previous month's forecast.

The forecast is based on an average of four models that include projected national GDP, oil futures prices, and the Texas and U.S. leading indexes.

"Texas employment fell in July, bringing year-to-date job growth down to 1.6 percent-below the state's long-run average of 2 percent," said Luis Torres, Dallas Fed senior business economist. "Nevertheless, Texas job growth has remained surprisingly strong given ongoing labor supply constraints."

"Job losses in July were concentrated in construction, financial activities and manufacturing," Torres added. "Additionally, government, information services and trade and transportation services recorded job losses. In contrast, professional and business services registered strong job gains, followed by education and health services, and leisure and hospitality. Other services and oil and gas also reported job gains."

Additional key takeaways from the latest Dallas Fed report:

• The forecast suggests 241,300 jobs will be added in the state this year, and employment in December 2026 will be 14.6 million.
• Texas employment decreased by an annualized 0.1 percent in July. Job growth for June was 3.3 percent, which was revised down slightly.

In July, the unemployment rate, which takes into account changes in the total labor force along with other factors, declined in Brownsville-Harlingen, Houston-The Woodlands-Sugar Land, and San Antonio-New Braunfels, according to seasonally adjusted numbers from the Dallas Fed.

The rate was unchanged in Austin-Round Rock, Dallas-Plano-Irving, El Paso, and Fort Worth-Arlington.

The Texas statewide unemployment rate increased to 4.5 percent in July.

Find out more about the Texas Employment Forecast, plus additional information on seasonally adjusted and benchmarked Texas jobs data and metro unemployment rates.

For additional economic information on Texas metros, visit At the Heart of Texas.

Media contact:
Jon Prior
Federal Reserve Bank of Dallas
Phone: 214-922-6857
Email: [email protected]