Economic Impact Analysis 2026

Abstract

This paper analyzes the results of a regional economic simulation conducted using the REMI Model to evaluate the impacts of a sustained employment expansion in a key manufacturing industry in Texas. The simulation introduces an exogenous increase of 250 jobs per year in the machinery manufacturing industry in Texas, beginning in 2026 and continuing annually through 2035. Employment is specified in units of people and is defined as the number of jobs by place of work. The analysis examines how this persistent employment shock in machinery manufacturing affects broader regional economic outcomes over the 2026–2035 period, including potential implications for output, labor markets, and overall economic growth in Texas.

Executive Summary

This simulation aimed to evaluate an economic development project designed to bring new jobs and broader economic growth to Texas. The focus was on how changes in employment within a specific industry would influence the regional economy over time.

In the simulation, Policy Variable Group was used to represent changes in jobs within the Machinery manufacturing industry in Texas over the years 2026–2035. Within this, the Employment policy variable captured the number of jobs associated with machinery manufacturing activity in the state. By specifying employment changes in this NAICS-defined industry, the simulation directly modeled how expanding or contracting machinery manufacturing employment affected overall economic development outcomes in Texas across the ten-year period.

Across all indicators, the policy scenario yields very modest but uniformly positive deviations from the baseline path. Real activity, including consumption, investment, and output, is slightly higher throughout the horizon, while labor market measures show marginally stronger employment and labor force participation in tandem with a slightly larger population. Household incomes edge up in line with these gains, and compensation rises marginally, but the cost of living and consumer prices remain almost unchanged, indicating that the small improvements in real conditions occur with negligible additional inflationary pressure relative to the baseline trajectory.

Consumption is modestly higher than baseline across the projection period
- Average consumption increase is reported at 56.9 million fixed 2024 dollars, equivalent to roughly a 0.0030% gain
- The largest annual deviation reaches 61.8 million above baseline in 2035, corresponding to about 0.0031%

Investment shows small but broadly positive responses in housing, business capital, and public spending
- Housing investment averages an increase of 12.84 million (around 0.0139%), peaking at 19.9 million (0.0216%) in 2028
- Business capital investment is higher by an average of 6.43 million (0.0073%), with a maximum deviation of 7.5 million (0.0086%) in 2028
- State and local government spending rises by 7.85 million on average (0.0034%), with a maximum increase of 8.8 million (0.0038%) in 2031

Output and GDP record small but consistent gains relative to the baseline
- GDP averages 135.44 million fixed 2024 dollars above baseline, a 0.00437% increase, with a peak deviation of 141.0 million (0.0047%) in 2029
- Total output is higher by an average of 266.28 million (0.00486%), reaching a maximum of 276.3 million (0.0053%) in 2029
- These changes indicate slightly higher production and value added, though all percentage differences remain well below 0.01%

Labor market and demographic indicators show marginal strengthening
- Total employment is on average 861.59 jobs above baseline (0.00403%), with a maximum gap of 935.5 jobs in 2028 (0.0044%)
- Population rises by 789.88 individuals on average (0.002365%), with the largest increase of 1,082.5 individuals in 2035 (0.00317%)
- The labor force expands by an average of 519.62 individuals (0.00316%), peaking at 621.9 additional workers in 2035 (0.0037%)

Income, compensation, and prices move only slightly, with negligible inflationary impact
- Real disposable personal income per capita increases by an average of 0.000291 percentage points (about 0.0030%), reaching 0.0003 percentage points (0.0032%) in 2028
- Personal income rises by 104,782.57 thousand current dollars on average (0.00364%), with a maximum deviation of 119,691.1 thousand in 2035 (0.0039%)
- Average annual compensation is 0.001182 thousand current dollars higher (0.00148%), peaking at 0.00131 thousand (0.0016%) in 2033
- The cost of living index and consumer price index increase only marginally, with average gaps of 0.000957 and 0.000731 index points, corresponding to 0.000686% and 0.000542%, and maximum deviations of 0.00114 and 0.00085 (0.0008% and 0.00064%) in 2033 and 2030 respectively

Note: Individual values in this table have been rounded for display. Averages were calculated using the original unrounded data, which may result in slight discrepancies between the displayed values and the computed averages.

Employment in Key Industries

Machinery manufacturing, Construction, Retail trade, Professional, scientific, and technical services, and Food services and drinking places are the most impacted industries in the simulation in terms of Employment in Key Industries, with all reported figures representing positive deviations from the baseline forecast. Machinery manufacturing shows the largest and most stable gain, adding roughly 250 more jobs than the baseline each year, with a gradual decline from 256.1 additional jobs in 2026 to 250.8 by 2035. Construction employment is also substantially above baseline, peaking at 144.6 extra jobs in 2028 before tapering to 50.5 additional jobs by 2035, indicating a front-loaded boost that diminishes over time but remains positive. Retail trade maintains a steady uplift of about 47–55 jobs above baseline throughout the period, while Professional, scientific, and technical services exhibit a moderate increase of roughly 38–44 additional jobs, peaking in 2028–2029 and then easing slightly yet staying consistently higher than the baseline. Food services and drinking places show a steadily rising gain, increasing from 32.6 more jobs than baseline in 2026 to 43.7 by 2035, suggesting that the policy’s incremental impact on this sector continues to strengthen over the simulation horizon.

Final Demand Components