Growth to Moderate, But Still Well Outpace the Rest of the US in 2024
Following very strong economic growth of 5.7% in 2023, well over twice the national rate, the Texan economy is set to moderate in 2024. Even then, the state economy is expected to handsomely outpace the national economy, growing twice as much this year. The energy industry continues to remain a bright spot, as oil prices remain elevated on the back of global geopolitical tensions. High energy production in the state is anticipated to be a support to employment and incomes. Job growth is likely to moderate in 2024 as sharp interest rate increases, high inflation, and softer U.S. and global economies restrain hiring by Texan employers.
Texas was a big beneficiary of trends that swept the US economy in the early years of the pandemic. Americans moved from big coastal cities to Sunbelt suburbs, where businesses expanded and added jobs, household incomes and spending rose, and property markets boomed. The energy industry’s rebound reinforced these trends in Texas.
Most of the abovementioned positives are expected to provide less support to growth in 2024. Consumer spending is likely to soften on the back of higher interest rates and cost of living pressures. The Fed’s tighter monetary policy rippled through to more expensive mortgages and construction loans and is contributing to weak homebuilding and sales in 2024. Even so, residential construction is anticipated to rebound moderately in 2024 on the back of resilient demand from population, job, and income growth. Single-family residential construction is projected to rise over the forecast horizon, as high rental vacancy rates and tighter lending standards for multifamily home builders weigh on multifamily construction. Despite the strains on affordability, demand for housing is expected to exceed supply and contribute to house price appreciation.
For a PDF version of this publication, click here: 2024 Texas Mid-Year State Economic Outlook
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