According to an economist from the Dallas Fed, Texas has every opportunity to survive a potential national recession.

“We … ran a number of different models and did some real stress tests on those models, but we really couldn’t get a forecast that takes into account the contraction in our region, at least at this time,” Orrenius said during the Dallas Fed meeting. Friday event.

While job growth is expected to be lower this year than in the previous two years — a 3.5% increase in 2022 and a 6% jump in 2021 — Orrenius said the outlook is still more optimistic than in most parts of the country, due to government measures. flexible workforce. This includes the fact that much of the growth in the Texas workforce comes from people who take jobs here and move from other states or countries.

“If there is a recession, there will be less migration to the state, which is a shock absorber for us,” she said. “It will put less pressure on unemployment.”

In addition, Orrenius said a strong energy sector is also a “big positive” for the state’s economic outlook, despite the industry providing “less momentum” than in the past.

“The foundations for government growth in this region are really healthy,” she said. “We believe that Texas is better prepared for a soft landing than the country.”

The Dallas Fed event coincided with news of unexpectedly strong job growth nationwide in January. U.S. employers added 517,000 new jobs last month, more than 2.5 times more than economists had forecast, according to the latest Bureau of Labor Statistics data on nonfarm payrolls. The country’s unemployment rate also fell slightly to 3.4%, the lowest level in more than five decades.

It’s unclear what this latest data looks like in Texas because the federal agency has yet to release state-by-state data. But the state led the U.S. in job growth in 2022, adding 650,100 non-farm payrolls, and continued its 14-month streak of record employment numbers with December’s.

That’s not to say that raising interest rates by the Federal Reserve isn’t having a broad impact on the economy, Orrenius said.

In Texas, she pointed to a decline in house prices from a recent peak in mid-2022, as well as a decline in commercial and residential real estate and consumer loans. In addition, the state is seeing slower growth in sales tax revenue, indicating less growth in consumption. Similarly, inflation in the state is declining from month to month.

The Fed’s speed bumps have had the intended effect, she said.