All signs point to a slowdown of the Texas economy as job growth slows, construction declines and inflation ticks up, according to a Monday report by the Federal Reserve Bank of Dallas.
The report on the Fed’s recent Texas Business Outlook Surveys — recurring surveys of Texas business executives across industries — was published as President Donald Trump attempts to reshape the U.S. economy through aggressive immigration and trade policies through the first six months of his second term in office.
Texas industries rely heavily on immigrants to fill jobs and international trade to sell their goods. Uncertainty surrounding Trump’s tariffs is giving investors pause and increasing costs for consumers while tough immigration enforcement is affecting the ability of businesses to recruit and retain employees, according to the report.
“Certainly from the private sector, this volatility obviously creates uncertainty,” said Ed Hirs, an economist and energy fellow at the University of Houston. “I would delay any investments, and really anything I’m doing. It’s pretty clear the economy is on a path to recession. It’s pretty clear the economy is on a path to inflation. The numbers are there.”
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While the report said the inflation level is low, it called the lack of significant tariff-driven price increases “concerning and puzzling.” The nation’s effective tariff rate has risen to 17.5% from 2.4% at the beginning of the year. While businesses may decide not to pass on the entire cost of tariffs to consumers, “they will likely pass on some,” according to the report.
The report speculated that consumers simply are not buying as much, causing businesses to avoid hiking prices over fears of losing customers. Companies stockpiling goods throughout the winter and spring ahead of expected tariff increases may also be allowing business to absorb some of the increased costs in the short term, according to the report.
You’re probably already feeling this at your favorite restaurant or coffee shop. That Trump has done, is doing, and will continue to do things that harm all of us is beyond question. That the lickspittles of the Texas GOP will cheer him on every step of the way is equally certain. It’s on all of us to make sure that the people who sat out 2024 and the people who rolled the dice on Trump because they believed his lies about the economy and what he would do to fix it know these things as well as we do.