‘Economy on fire:’ Texas adds nation-topping 650,000 jobs in 2022
Texas added 650,100 jobs in 2022, more than any state and more than double its historical average, as the economy continued to expand and leave the pandemic hangover behind.
Texas grew jobs 5%, a growth rate that led all states and easily surpassed the 3% job growth for the nation, according to U.S. Bureau of Labor Statistics data released Tuesday.
“The Texas economy was on fire in 2022,” said William Adams, chief economist at Comerica Bank. “And the job growth numbers really capture the amazing dynamic happening in our state.”
In much of the country, potential growth is limited by a labor shortage. But Texas has been drawing workers from other states and countries, enabling the labor force to keep expanding: “Texas, as a magnet, is able to pull ahead of the rest of the country that’s facing that [labor] constraint,” Adams said.
The Dallas-Fort Worth region grew even faster than the state — 5.9% for the year. That was the fastest growth rate among large metros, the Texas Workforce Commission said.
North Texas posted a net increase of 235,200 jobs last year, seasonally adjusted. That’s more than double the average gain in the years before the pandemic. It nearly matched the region’s total in 2021 when the economy was rebounding from a loss of over 100,000 positions during the first year of COVID-19.
For perspective, consider that Dallas-Fort Worth added more jobs last year than 46 states — and accounted for 36% of Texas’ net gains.
“There’s a virtuous cycle of economic growth happening in our metro area,” Adams said.
That growth draws more businesses, which creates more jobs, attracts more workers, stokes population increases — and contributes to a booming consumer market, he said: “Growth is fueling growth.”
Ray Perryman, a Waco economist who’s tracked Texas trends for over 40 years, cited several factors for the state’s impressive run, starting with domestic migration. For decades, people have relocated to Texas and other Sun Belt locales, and that trend accelerated during the pandemic and continued during the recovery.
“Many of these individuals are highly skilled professionals who are helping to overcome worker shortages and enabling future gains,” Perryman wrote in an email.
Texas’ oil and gas industry has added considerable momentum to the economy, especially after Russia invaded Ukraine in February 2022. The state has about 100 more oil rigs in operation compared with a year ago, Perryman said, and the impact lifts industries and locations up and down the production chain.
Texas’ mining and logging sector, which includes the oil and gas business, added over 40,000 jobs last year. That’s an annual gain of 21% — four times higher than the state’s growth rate.
Leisure and hospitality, one of the pandemic’s hardest-hit segments, added over 155,000 jobs last year, more than any other. The sector that includes health care, which had been lagging, added over 100,000 positions.
Perryman likes to tout Texas’ impact by pointing out that the state accounted for over half the net gains in total U.S. employment since the pandemic: “That is pretty remarkable,” he said.
Last year’s sky-high numbers could well be revised downward after the Bureau of Labor Statistics benchmarks the totals in the next few months. The Federal Reserve Bank of Dallas, which has its own method for benchmarking and adjusting job estimates, made a major downward revision in Texas’ growth last month.
In mid-December, the Dallas Fed projected that Texas’ 2022 job growth would be 3.5%, significantly lower than the BLS’ current estimate of 5%. That translates into a difference of over 100,000 jobs.
“The benchmarking will probably mean these numbers will be a little smaller,” said Daniel Oney, research economist at the Texas Real Estate Research Center at Texas A&M. “Job growth will certainly be very strong, but that will dampen things a bit going into 2023.”
Remote work has made it difficult to count certain employees for a particular geographic area, he said, and that contributes to bigger swings after survey estimates are compared with census results.
Oney isn’t worried about the threat of a general recession because it’s likely to be brief and Texas is likely to maintain a comparative advantage.
“What concerns me are things like the office [real estate] market, where you’ve got a lot of debt that’s going to roll over and have to be refinanced,” he said.
That will lead to sticker shock as companies reset loans to higher interest rates, a process that will be repeated for other investors, too. “It’s not the end of the world, but it may make for a worse recession,” Oney said.
Most economists expect a significant slowdown in Texas job growth, because of both national headwinds and the fast pace of the previous two years. Adams and Perryman, for instance, said Texas jobs would grow around 2% this year.
Record hiring, high turnover and strong wage growth are likely to subside, and more layoffs are ahead. “We expect a slowdown, but we don’t know yet whether that will mean a recession,” she wrote in an email.
The slowdown will especially affect businesses that benefited from Texas’ rapid growth.
“Sectors like recruiting, real estate, finance and construction could all face deeper job losses,” Vachon wrote.
Adams, the Comerica economist, believes a recession is more likely than not in the next couple of quarters. Higher interest rates will hold back the housing market and prompt consumers to pull back on discretionary spending.
“But that’s a cyclical story,” Adams said. “The trend story in Texas and D-FW is much stronger.”