What makes the Texas economy so strong?
As the 9th largest economy among the nations of the world, Texas offers a combination of unique competitive business advantages that no other state can claim: a business-friendly climate—with no corporate or personal income tax—along with a highly skilled and diverse workforce, easy access to global markets, robust ...
The top three sectors by total employment are Manufacturing, Real Estate and Rental and Leasing, Mining, while the unemployment rate across the state in 2022 was 4.2%.
The economy of the State of Texas is the second largest by GDP in the United States after that of California. It has a gross state product of $2.355 trillion as of 2022. In 2022, Texas led the nation with the most companies in the Fortune 500 with 53 in total.
Texas continues to lead the nation in an economic resurgence and remains one of the strongest and most diverse economies in the nation. Below is a snapshot of the state's economic status: Texas unemployment rate continues to hold steady at 4%. (Texas Workforce Commission, April)
The Lone Star State has consistently ranked among the nation's leading contenders for GDP growth in recent years. The $1.9 trillion Texas economy is one of the Top 10 -largest in the world, and the last quarter of 2021 realized a 10.1 percent uptick in the annual rate growth of real gross domestic product.
The Texas GDP represents about 10% of the United States GDP, making it the second largest state economy in the country.
Texas is the top producer of cotton, hay, sheep, goats, mohair and horses. Some of the state's top crops also vegetables, citrus, corn, wheat, peanuts, pecans, sorghum and rice. Texas is one of the leading exporters of agricultural commodities.
The state takes in over $250 billion a year in revenue coming from over 60 different taxes, fees and assessments. Most of that money goes out to pay for services and activities such as road construction, professional licensing, prisons and university research.
States With Highest GDP
The state with the highest GDP is California, with a GDP of $3.5 trillion. Texas has the second-highest GDP, with a GDP of $2.1 trillion, driven by the energy industry and international trade. New York is the third state with the highest GDP, with a GDP of $1.9 trillion.
Exhibit 3: Real GSP of Largest States, 2010-2020
Early in the third quarter of 2021, the Texas GSP rose 3.5 percent to just over $2 trillion in current dollars ($1.8 trillion in real 2012 dollars), making up 8.6 percent of the total U.S. GDP.
What state has the highest GDP?
California is the state with the highest gross domestic product by state, with $3.558 trillion, as of the second quarter of 2022.
Texas has led the U.S. in state export revenue since 2002 and has the second-highest gross state product. If Texas were a sovereign state, it would have the 10th-largest economy in the world.
Houston, Texas
Perhaps those factors led to its high ranking on the Milken index for job growth. The Houston city area also scored high on Policom's index for economic strength that looks at consistent economic growth over time.
It isn't. The United States, by contrast, has a nominal GDP of $20.89 trillion—roughly 14 times the size of Russia's economy. And nominal GDP per capita is $63,413. Even three U.S. states have larger GDPs than Russia: California ($3.1 trillion), Texas ($1.78 trillion) and New York ($1.7 trillion).
Like the rest of the United States, the largest employment sectors in Texas are retail trade, professional services, leisure and hospitality, and health care. None of these sectors are exhibiting exceptional growth, but they form the economic backbone of the state and represent the majority of jobs and income.
Texas leads the U.S. as the top producer of both crude oil and natural gas, with nearly 480,000 miles of pipelines running throughout the state. The state is home to one-fourth of the nation's proved natural gas reserves and is #2 in total LNG exports.
There were 13.2 million people employed in Texas in 2020, a 17.1 percent rise from 2010 according to data from the U.S Bureau of Labor Statistics. By employment levels, restaurants, education, and health care are the three largest industries in the state.
