Year to date, Texas employment growth is an annualized 3%, well above the U.S. growth of 1.7%. Regional activity is also expanding rapidly, with the September readings of the Dallas Fed Texas Business Outlook Surveys remaining near multiyear highs for production and revenue. Moreover, Texas personal income growth in the second quarter was the highest in the nation at 6%, which bodes well for second-quarter GDP growth. First-quarter real GDP, the most recent GDP data available at the state level, shows the Texas economy grew an annualized 2.9% quarter over quarter compared with 2.2% for the nation.

The Texas economy is likely growing above potential, which means there may be capacity constraints acting as bottlenecks or speed limits on the expansion.