Texas service sector activity contracted further in October, according to business executives responding to The Dallas Fed's survey...

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Source: Bloomberg

The revenue index, a key measure of state service sector conditions, fell four points to -6.4, its lowest reading since July 2020...

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Labor market measures suggested further declines in employment, though hours worked were largely unchanged this month. The employment index fell slightly to -5.8 from -3.6 in September...

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Source: Bloomberg

Perceptions of broader business conditions worsened in October, but respondents’ expectations regarding future service sector activity remained positive, though October readings were below average.

However, it's the responses that give us a glimpse into the harsh reality on the ground as the locals are hardly delighted with either tariffs, high interest rates, falling demand or general economic malaise, which is to be expected from a regional Fed that is largely dependent on the US energy industry (read Texas shale) which in turn has been crippled by Trump's demands to keep oil prices as low as possible if not lower, and has hammered the US oil E&amp;P industry. 

Selected comments below (<a href="https://www.dallasfed.org/research/surveys/tssos/2025/2510#tab-comments">read the full set here</a>)

Accommodation

<blockquote>
The government shutdown and economic malaise are taking a toll on hotel and travel demand.
</blockquote>

Administrative and support services

<blockquote>
It feels impossible to predict what the hiring and employment market will be in six months. This year has been the most challenging in 15 years of search and staffing. Candidates have failed background checks. Employers have delayed hiring, candidates have accepted counter offers, others have continued interviewing after accepting a new role. These events used to be uncommon and rare. Now they're happening on a regular basis. Revenue swings month to month are drastic. We are trying to budget and forecast, but it is impossible, and I'm on the edge of laying off an employee now. 

Business has felt recessionary for over a year—no wonder we knew the jobs numbers were off and kept saying there was no way they were as good as reported, and we were correct. These are very tough times for small and midsized businesses.

The level of uncertainty has increased in the face of higher interest rates and borrowing costs. Layoffs in the energy sector are just now being felt, and the federal shutdown will have a compounding impact.

The government shutdown [is an issue impacting our business].

Most of our customers are federal agencies. If there is a shutdown, our business suffers.
</blockquote>

Ambulatory health care services

<blockquote>
We are seeing major price escalation resistance.
</blockquote>

Credit intermediation and related activities

<blockquote>
Some of our long-term clients are beginning to show interest in buying and selling properties again, and others are asking about their ability to replace short-term, bank-type loans with long-term, fixed-rate debt capital.

There are many moving parts to the economic environment, and the disruptions are resulting in an increase of destabilizing factors: the government shutdown, political instability, the anticipated impact of tariffs and the interest rate markets. Cybersecurity is still a priority, especially with the accelerating expansion of artificial intelligence. The cattle market is extremely elevated, and the price of beef over the counter and on the plate continues to be high. The race to expand the electrical grid is heating up. Nuclear-powered sources are back in the news as an alternative source of electrical power generation.
</blockquote>

Educational services

<blockquote>
Uncertainty about visa approval rates and H1-B visa fees will have a potentially significant negative impact.
</blockquote>

Pipeline transportation

<blockquote>
Lower oil prices impact producer activity and uncertainty.
</blockquote>

Professional, scientific and technical services

<blockquote>
We're seeing significant uncertainty among our oil and gas service company clients. Commodity prices are down, and there is no real cause to anticipate an upturn in drilling activities.

The residential market has continued its decline due to the uncertainty of the economy. Homebuilders are having a difficult time selling homes, even with the incentives they are offering, and existing homes are just sitting. The commercial market is a little better but is being held up by energy and data center transactions. We need a major adjustment in the pricing of homes or a significant reduction in the interest rate to get this market moving again.

Interest rates are still too high. Reduction in regulations is improving optimism. The Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act will open new opportunities.

We have seen an upturn in work flowing from clients in October in consulting engineering.

All of our customers are scaling back on technology spending.

I feel like our clients are more apprehensive. We are writing a lot of proposals, but they are just sitting. Projects are still being planned, but the execution is being delayed.

I work globally with international companies, so uncertainty is inherently high, and it will likely increase in the coming months. Four new governments in Latin America will be decided within the next six months, and such political transitions always contribute to greater economic and business uncertainty.

Commodity prices adversely affecting upstream oil and gas companies coupled with potential increased costs from renewed China tariffs creates an uncertain or negative outlook.

We are pitching to more small businesses and nonprofits on our marketing and advertising services than we have since founding the company 14 years ago. More than 80 percent of responses from business owners indicate they are not spending money on marketing and additional items until 2026 because of economic uncertainty.

Trump administration volatility causes clients to stall new purchases.

The industrial sector appears to be gaining momentum.

Tariffs [are an issue impacting our business].

We aren't getting the larger requests that we saw at the end of fourth quarter 2024. That makes me nervous as we work on our 2026 pipeline and prospects.
</blockquote>

Publishing industries (except internet)

<blockquote>
There is significant inflation in regular goods prices.

We continue to be concerned about compounding effects of tariffs, government shutdown, reduced federal spending, wavering consumer confidence and the levels of credit card usage and delinquency (which we expect to increase), as well as the generally antibusiness policies being championed by Republican lawmakers and the Trump administration.
</blockquote>

Real estate

<blockquote>
The sentiment we see from apartment residents, owners, vendors, employees and others is neither optimism nor excessive worry. Folks are getting by OK, reallocating spending to compensate for high food prices, and they seem resigned to their fate. Immigration and Customs Enforcement (ICE) continues to terrify immigrants, and they are keeping their heads down. Few people are moving, changing jobs or expecting more. The economy feels like it's in the doldrums, and all the outrageous politics just feels like noise. Our company is doing well enough to throw a couple of big events and make improvements to properties we own. Being conservative, focusing on fundamentals and conserving cash have paid off for us. Others see us doing well, so more prospects are coming our way.

We are always hopeful things are going to move forward and upward. Our goal is to survive the next six months.
</blockquote>

Repair and maintenance

<blockquote>
We are a naturally seasonal business. Our outlook for the future is bright.

Securities, commodity contracts and other financial investments and related activities

Uncertainty remains uncertain.

I wish we would get clarity on tariffs. We have been slow to sign new clients.

Government shutdown, federal employee firings, tariffs, ICE raids, international turmoil and higher cost of living are creating general business uncertainty and increasing downside risks to our businesses.
</blockquote>

Specialty trade contractors

<blockquote>
Volatility—including interest rates, stock market fluctuations, geopolitical issues and the government shutdown—is creating poor confidence.
</blockquote>

Support activities for transportation

<blockquote>
With the current administration taking meaningful action to address foreign labor issues, the outlook for the trucking and logistics industry has improved considerably. The decline faced in recent years has been attributable to violations of federal laws, most notably allowing those not legally authorized and without English proficiency to saturate the market and to violate cabotage restrictions. We are encouraged by the renewed emphasis on enforcement and compliance. As these measures take effect and below-market labor practices are curtailed, American motor carriers will once again be able to begin breaking even and then to profit.
</blockquote>

Truck transportation

<blockquote>
Our business has died.
</blockquote>

And finally, one respondent waxed poetic:

<blockquote>
With continued angst over secured overnight financing rate, federal funds rate and prime

Pundits are debating whether “it is different this time.”

Federal Reserve keeps tracking,

but economic data’s still lacking.

Historians will laugh or cry at this rhyme!
</blockquote>

<a href="https://www.dallasfed.org/research/surveys/tssos/2025/2510#tab-report">Source: Dallas Fed</a>

So, with President Trump doing everything in his powers to bring down the price of oil (and therefore gas), it appears the locals can't take it anymore.

"Business has felt recessionary for over a year... no wonder we knew the jobs numbers were off and kept saying there was no way they were as good as reported, and we were correct..."


"Our Business Has Died": Texas Services Sector Sentiment Slumps Further In October

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