A report released today by the Federal Reserve Bank of Dallas is headlined “Texas modestly grows with soft landing likely.” Here are 10 takeaways from the report:
- Texas firms reported below-average output growth to start 2023.
- Employment and wage gains remained elevated despite indications of a softening labor market.
- Price and wage inflation are expected to slow in 2023 but remain above historical averages.
- Employment growth is expected to slow in 2023, but the state is likely to avoid a recession.
- Services and manufacturing are barely in expansionary territory coming into 20223, with the Dallas Fed’s Texas Business Outlook Surveys (TBOS) manufacturing production index near 0 since mid 2022.
- New orders for manufacturing have declined, but the pace has slowed.
- Revenues for services have weakened, with most industries noting high inflation and rising interest rates.
- The TBOS employment indexes remain elevated, but the share of firms looking to hire has fallen.
- A majority of firms are still understaffed, and many opt not to hire. But others report being overstaffed with no planned layoffs, which could be an indication of hoarding labor.
- Risks are weighted to the downside, with Texas businesses concerned over weakening demand and labor market tightness.
Read more in today’s Dallas Fed report.
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