Writer: Andrea Teran
3 min read November 2023 — Among the thriving regional economies in the United States, Texas stands out as a force, with Space City helping the state reach new heights.
Recently acknowledged by Site Selection magazine as the top state for business climate, Texas maintains a solid reputation for attracting investment and fueling business expansion with several recent corporate relocations and expansions propelling the state’s status.
“In Texas, our objective is to see businesses thrive, thereby ensuring the prosperity of Texans,” said Gov. Greg Abbott in an interview with the economic development magazine.
The distinguishing factors that set Texas apart, according to Abbott, encompass the state’s pro-growth policies, absence of corporate and personal income tax, and its expanding, diverse workforce. Abbott underscored the Texas CHIPS Act and the Jobs, Energy, Technology, and Innovation Act (JETI) as vital in fortifying the semiconductor industry, reducing reliance on foreign production and supply chains.
With a GDP of $537.1 billion based on the most recent data, the Houston metropolitan area’s economy ranks as the seventh largest U.S. metro in the nation. According to Greater Houston Partnership’s (GHP) Houston Facts 2023 report, the economic output surpasses some entire states and is considered the 25th largest economy globally as an independent market.
GHP’s report indicates the robustness of Houston’s employment sector, with current employment reaching a record 3.36 million and projected to exceed 3.4 million by year-end, positioning the region as a fertile ground for job opportunities.
Houston’s economy is diverse with trade and transportation, oil and gas, and healthcare considered key pillars, each contributing significantly to the city’s economic engine. The presence of 26 Fortune 500 headquarters and 48 Fortune 1000 headquarters speaks to the city’s ability to attract large corporations, a trend likely to continue given its strategic advantages.
Moreover, Houston is undergoing a transformative phase in its energy sector, marked by a growing emphasis on energy transition businesses. Private market investments in this domain skyrocketed in 2022, reaching $6.1 billion, a 61% increase compared to the previous year as the GHP report states. The increase in investment was predominantly led by strategic M&A
While the economic landscape changes, Houston’s population growth has been on the rise. According to the report, the population has surpassed 7.3 million residents. The city’s allure is further underscored by its ranking as the second most affordable metro in the U.S. Houston consistently offers a cost of living nearly 8% below the national average, with housing costs around 18% lower. This affordability index, coupled with the city’s ever-expanding job market, positions Houston as an attractive destination for both seasoned professionals and recent graduates.
Nevertheless, housing affordability continues to be an area of concern, similar to other large markets in the country. According to a report from the Kinder Institute for Urban Research, approximately 51% of Harris County and City of Houston renters were cost-burdened in 2021, spending more than 30% of their income on housing. This statistic, while highlighting a growing concern, also emphasizes the need for strategic urban planning and policies to ensure that the city’s economic growth is inclusive and benefits all segments of its population.
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