Texas lost fewer jobs than expected in September as a result of Hurricane Harvey, and post-hurricane data from the Texas Business Outlook Surveys point toward a rapid recovery from the storm. The 2017 Texas job growth forecast remained at 2.6% after adjusting the model input data for the temporary impact of the storm.
There are cyclical and structural headwinds to the Texas economic outlook. Labor markets have grown significantly tighter this year; the September Texas unemployment rate was 4%, having fallen 1% since April and is currently at a level last observed in December 2000. There is some slack remaining in Houston, but not much, which could hamper hurricane recovery efforts. Given Texas is highly dependent on trade with Mexico, uncertainty around ongoing trade negotiations is another headwind.