Immigration Declines Hurting Texas Job Growth, Dallas Fed Forecast Shows

Immigration declines are leading to an employment slowdown in Texas, according to data from the Dallas Federal Reserve Bank.

The Fed released its newest employment forecast on Friday. Based on four models, including projected national GDP, oil futures prices and the Texas and U.S. leading indexes, the report forecasts that jobs in Texas will grow by 1.4% in 2026, following a sluggish February for employment growth.

A more optimistic forecast released earlier in April predicted employment growth in the state would be closer to 1.9%, translating to an overall addition of 278,400 jobs in 2026. The newly released forecast now puts that total closer to 205,500 jobs by the end of the year.

Texas employment grew by only 0.3% in February, according to the report.

Luis Torres, a senior economist with the Dallas Fed, said declines in immigration are among “several headwinds” contributing to the slowdown.

“Declining immigration is constraining labor supply, and higher productivity is suppressing labor demand,” Torres wrote in a statement.

U.S. Census Bureau data released earlier this year showed net international migration fell to 1.3 million in 2025, after peaking at 2.7 million in 2024. That number is expected to fall to just 321,000 in 2026 if trends continue, according to the data.

Based on census data analyzed by the Brookings Institution, Dallas-Fort Worth recorded a 52% decrease in net immigration in that time, translating to a year-over-year decline of over 65,000 arrivals. In a separate Brookings report, analysts attributed the slowdown to President Donald Trump’s hardline immigration stance that has resulted in ending refugee programs, halting asylum claims at the southern border, stifling green card processing and travel bans. 

The Brookings report also states that lower immigration levels generally do not create more jobs for U.S. citizens and lead to a smaller economy overall with fewer consumers and producers, ultimately harming the country’s economic growth.

In the statement, Torres also said that business activity in the state “has recently moderated, and geopolitical uncertainty remains elevated.” On Wednesday, the AP reported that Iran had fired on three ships and seized two of the vessels in the Strait of Hormuz despite a ceasefire deal touted by Trump, again threatening a critical worldwide oil chokepoint.

“Meanwhile, high oil prices are expected to boost state economic activity only if they are sustained,” Torres wrote.

The largest employment gains were seen in the information, professional and business services and manufacturing industries, Torres said. Trade and transportation, oil and gas and other services accounted for some of the largest employment declines.

Employment growth in Texas stalled in 2025 after years of surpassing nationwide averages in job gains. While Texas still fared exceptionally well compared to other states, job growth fell to near zero in 2025.

Among major Texas metropolitan areas, only Dallas recorded employment growth, with a meager 0.1% increase in jobs in February. Employment in Austin declined by 3.3%, and along with El Paso and Houston, Fort Worth trailed the state capital with a 1.6% decline. Overall unemployment rates, however, decreased everywhere except in Houston in February.