Report: Dallas Fed Sees Modest Growth, ‘Soft Landing’ for Texas

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:

  1. Texas firms reported below-average output growth to start 2023.
  2. Employment and wage gains remained elevated despite indications of a softening labor market.
  3. Price and wage inflation are expected to slow in 2023 but remain above historical averages.
  4. Employment growth is expected to slow in 2023, but the state is likely to avoid a recession.
  5. 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.
  6. New orders for manufacturing have declined, but the pace has slowed.
  7. Revenues for services have weakened, with most industries noting high inflation and rising interest rates.
  8. The TBOS employment indexes remain elevated, but the share of firms looking to hire has fallen.
  9. 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.
  10. 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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