The COVID-19 pandemic has caused significant economic disruption, but the Texas economy continues to recover. Recently released October data indicates that Texas’ seasonally adjusted unemployment rate continues to decline and now stands at 5.4%. Texas added 56,600 jobs for the month and is nearly back to pre-pandemic levels. While issues such as supply chain challenges and inflation will likely persist over the coming months, the long-term outlook for the state remains favorable.
One of the reasons Texas will do well is the energy sector, which is a major source of jobs and investment not just in producing areas, but across the state. Even though drilling activity has been slow to respond to recent price levels, oil and gas will remain crucial to future energy momentum for decades to come. In the long term, the industry will grow, improving business activity in the state. While climate issues need to be resolved, simple calculations of global expansion and fuel needs will ensure a vital, albeit evolving, role for fossil fuels for the foreseeable future.
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Another pattern favoring expansion is the state’s relatively young and growing population. The 15.9% increase in the state’s population between 2010 and 2020 was more than double the US rate, partly due to births and partly due to immigration from other parts of the United States and by the way. Growing youth numbers position Texas well for future opportunities (as long as sufficient attention and resources are devoted to ensuring a high-quality education from K-12 through higher education and training). technical).
Our latest long-term forecast for the Texas economy shows real gross product gains at an annual rate of 3.43%, driving an increase from approximately $1.7 trillion in 2020 to over $4.0 trillion in 2045. Nearly 6.8 million net new jobs should generate over the period, an annual growth rate of 1.72%. Total employment in 2045 is expected to reach 19.5 million. Real retail sales and real personal income are expected to increase by 3.48% and 3.57% respectively.
The service sector (including professional and business services, education, health care, accommodation and food services) will be an important driver of employment growth. The wholesale and retail segment is also expected to create a substantial number of jobs. Real gross product expansion will likely be concentrated in mining, services and manufacturing.
Before the pandemic, Texas was one of the fastest growing states in the country. Although the economy suffered a noticeable setback, much of the lost ground was recovered. There are challenges (such as education, infrastructure, restrictive social legislation, and major demographic shifts), but the strengths and composition of the state’s economy suggest it will expand substantially in the coming decades. coming.
Economist Ray Perryman is president and CEO of the Perryman Group, a Waco-based economic research and analytics firm.