Wells Fargo (NYSE:WFC) economists noted that the Texas economy, while cooling from its post-pandemic surge, continues to outpace the national average in employment and GDP growth. The state’s nonfarm payroll growth has slowed, aligning more closely with pre-pandemic levels, yet remains robust compared to the rest of the United States. Texas’ real GDP expanded at a 4.2% annualized rate in the third quarter of 2024, surpassing the national average of 3.1%.
Despite a slower job addition rate in November 2024, with only 9,100 new jobs created, the overall employment growth in Texas is still in line with historical trends. The moderation in hiring across several industries, including transportation, utilities, and manufacturing, is partly attributed to higher interest rates affecting consumer demand and financing costs.
The state’s unemployment rate has seen a slight uptick to 4.2% from 3.9% at the start of the year, which coincides with a significant increase in the labor force, indicating a slackening but still healthy job market.
Texas has also witnessed substantial population growth, adding nearly 563,000 residents in 2024 and ranking as the third fastest growing state. This growth has more than doubled the state’s population since 1980, bringing the current total to approximately 31 million people. The state’s robust population increase continues to be a key driver of its economic resilience.
The real estate market in Texas has experienced a deceleration, with home sales in November 2024 falling almost 24% from the same month in 2021. The cooling housing market is a consequence of high mortgage rates and inflated home prices, which have challenged affordability and tempered buyer activity.
The multifamily housing sector has also corrected, with new starts declining to pre-pandemic levels amid a surge in completed units and tighter financing conditions.
Looking ahead, the Texas economy is poised for continued solid growth into 2025. With the Federal Reserve expected to ease monetary policy, sectors previously hindered by high financing costs may see improvement. Texas’ strong demographic trends and economic fundamentals are likely to sustain its growth trajectory, despite the recent slowdown from its rapid expansion in recent years.
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