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A lack of employment growth and a slight increase in unemployment from July to August, along with fewer employers raising wages, are signs that Texas’ economy is slowing, economists at the Federal Reserve Bank of Dallas said in a report released Thursday.
The report, written by Pia Orrenius, the Dallas Fed vice president and senior economist, and Research Analyst Ana Pranger, said the number of employed Texans held steady at around 13.5 million last month, while the state’s unemployment rate increased from 4% in July to 4.1% in August.
In a video accompanying the report, Orrenius suggested the slowed economic activity may help slow inflation in Texas.
“While official statistics have yet to show a meaningful easing of price pressures in our region, our surveys suggest a rapidly increasing share of Texas companies are refraining from increasing prices,” she said in the video.
About 75% of Texas firms either kept prices the same or lowered them from August to September, according to the video.
Meanwhile, a smaller percentage of employers gave their employees raises in August compared to July, the report said. Only 38% of manufacturing firms and 29% of service companies boosted wages in August, the lowest monthly figures since spring 2021.
Despite the recent slowdown, the report said Texas job growth is expected to exceed 4% this year, which would exceed the state’s historical average growth rate of 2%.
While the August numbers may signal a coming recession, Orrenius said in an interview Thursday that it’s “far too early to say.”
“We’re just seeing this begin, so we’re still not sure if it’s going to stick,” she said. “I think the September jobs numbers will tell us a lot.”
She added the Federal Reserve’s recent string of interest rate hikes aimed at curbing inflation is also contributing to the Texas slowdown.
“They want the economy to slow because we need less inflation,” she said. “Hopefully, it will result in less inflation, and the central bank can step off the brake.”