Texas Outlook 2025: Inflation, Energy And Tariffs

2025-02-10 15:10:17 ET

Summary

• Texas shows resilient growth with lower inflation and higher labor growth than the national average, but policy uncertainties and inflation are headwinds.
• Energy sector remains robust, with significant growth in natural gas demand and steady oil production, but faces some risks from tariff retaliation.
• Energy production and grid growth have been strong, driven by demand, but future projects are at risk; economics are key.
• Texas' economic outlook is broadly instructive, with energy exports and trade flows impacted by policy uncertainty.
• I'm most bullish about energy producers' ability to navigate changes in the economy and policy.

"Don’t Mess with Texas," a state slogan once frequently used, sums it up. The GDP for 2024 was $2.6 trillion, the eight largest economy in the world. As a major energy producer in oil and gas and a hefty renewables portfolio on the grid, new policy directions may be felt in Texas. Immigration policy and tariffs have also been flagged as relevant to the Texas economy....

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