Texas's Economic Outlook

The economy of Texas is the second-largest in the United States, with a gross state product of $1.887 trillion. Texas’s economy today relies largely on information technology, oil and natural gas, aerospace, defense, biomedical research, fuel processing, electric power, agriculture and manufacturing.

The coronavirus pandemic has steered the economy into a recession. In Texas, the state’s unemployment rate remains nearly double what it was at the start of the year, and nearly 3.5 million people have filed for unemployment relief since mid-March. During the week ending September 12, a total of 49,644 Texans filed initial applications for unemployment relief. On Aug. 6, the Federal Reserve Bank of Dallas said that the state will recover some of the jobs lost earlier in the year. In August Texas collected $2.8 billion in sales tax revenues, a decrease of 5.6% from the same period in 2019.

The Economic Performance report shows that within the past ten years, Texas’s economy has outperformed those of all the other states. The performance index is based broadly on a state’s performance within State Gross Domestic Product (rank: 7th), Absolute Domestic Migration (rank: 1st) and Non-Farm Payroll Employment (rank: 2nd).

The Economic Outlook tells another story about the Texas economy. The ranking is based on a state’s current standing in 15 state policy variables. Each of these factors, ranging from sales tax Burden to state minimum wage, is influenced directly by state lawmakers through the legislative process. Texas appears 15th in this ranking. Although they have ranked number one in the past, it is possible that the state may lose the top spot in the future.

States that spend and tax less experience higher growth rates than states that spend and tax more. This is an important finding for entrepreneurs looking to start their own business. Although Texas ranked first in the nation for top marginal income tax rates (0%), the state is ranked 38th for sales tax burden, with residents paying an average of $28.38 per $1,000 of personal income.

When it comes to deciding where franchisors should develop their brand, it’s always important to look at the complete picture of what the region has to offer. Although Texas is ranked first for performance, it is clear there are other factors to take into consideration.

Jamie Cecil, vice president of franchise development for craft beer franchise The Brass Tap, notes that the restaurant franchise is eager to grow in Texas. “We’re thrilled about the success of the brand throughout the Dallas metro area, and we see tremendous potential for development across Texas, including in the Houston market,” said Cecil.

Big Blue Swim School CDO Scott Thompson notes that the state presents a major opportunity for growth for the swim school franchise. “Texas is one of the largest markets in the U.S.

,” CDO Scott Thompson said. “From a population standpoint, it is one of the fastest-growing states. People are moving to it on a daily basis, and our potential customers are currently residing around major metro areas, so it’s a good starting point to open in multiple major markets.

Big Blue Swim School wants to be everywhere, and Texas provides us with an opportunity to hit a handful of large markets at the same time.”

MOOYAH Burgers, Fries & Shakes President Tony Darden said that the burger franchise has focused on the state for franchise development since day one. “We are laser-focused on expanding our presence across our home state of Texas,” said Darden. “This is where we are born and bred. We have grown up here, and Texans truly love our standout product and quality Guest service.”

Al Hank, senior vice president of operations for Famous Dave’s, also notes that Texas has been a prime target market for growth. “Given the recent trends over the past two years and the resiliency of the Famous Dave's brand throughout the pandemic, growth is the focal point for us moving forward,” said Hank. “We're excited to enter new markets and into new territories, by utilizing data, demographics and traffic to find the best locations possible.”