Texas Job Growth Forecast to Slow in 2026 Due to Immigration Crackdown

Dallas Fed predicts modest 1.1% employment increase as Trump's ICE policies limit labor supply

Published on Feb. 6, 2026

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According to the Federal Reserve Bank of Dallas' annual Texas Employment Forecast, the state is expected to add around 154,600 jobs in 2026, a 1.1% increase. This modest growth comes after essentially flat employment in 2025, which the Dallas Fed attributes to the "chilling effect" of the Trump administration's ramped-up immigration enforcement efforts that have made it harder for many Texas businesses to hire or retain foreign-born workers.

Why it matters

Texas has long experienced robust economic and population growth, which has fueled the state's economy. However, the Dallas Fed warns that a significant slowdown in population growth due to reduced domestic and international migration could have serious long-term ramifications, as the Texas economy is "built around building houses for people that are coming, and accommodating new businesses."

The details

Several factors are contributing to the state's tepid job growth, including the impact of AI boosting productivity and suppressing hiring, as well as low oil prices serving as a drag. Census data shows Texas population growth slowed by about one-third in 2025, and the Dallas Fed forecasts just 89,000 new residents will move to the state in 2026 - the slowest pace in over a decade.

  • In 2025, Texas added just 10,700 jobs.
  • The Dallas Fed released its annual Texas Employment Forecast on Friday, February 6, 2026.

The players

Federal Reserve Bank of Dallas

The regional Federal Reserve bank that covers the state of Texas and publishes an annual employment forecast for the state.

Pia Orrenius

A labor economist and vice president of the Dallas Fed who presented the forecast and discussed the impact of the Trump administration's immigration crackdown.

Donald Trump

The former U.S. president whose ongoing immigration enforcement policies are cited as a key factor limiting Texas' labor supply and job growth.

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What they’re saying

“The immigration crackdown is really having an effect limiting labor supply.”

— Pia Orrenius, Labor economist and vice president, Federal Reserve Bank of Dallas (Houston Chronicle)

“It's almost more the chilling effect, than people actually leaving or being deported. This is actually impacting both unauthorized immigrants and legal immigrants.”

— Pia Orrenius, Labor economist and vice president, Federal Reserve Bank of Dallas (Houston Chronicle)

What’s next

The Dallas Fed's forecast indicates Texas' population and economic growth could face long-term challenges if the state continues to see reduced domestic and international migration, an issue the bank says policymakers will need to monitor closely.

The takeaway

Texas' historically robust economic growth has been fueled by strong population increases, but the Dallas Fed warns that the Trump administration's immigration crackdown is now limiting the state's labor supply and dampening job creation, potentially presaging broader demographic and economic challenges ahead.