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Economy of Texas

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  • 5 chapters
Panoramic view of the Downtown Houston skyline .
Henry Han · CC BY-SA 3.0

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In 2023, Texas grossed more than $440 billion a year in exports, more than double the next highest state California ($178 billion). The state continued the lead, exporting over $450 billion in goods in 2025, while importing almost $412 billion during the same year, an increase of 3.7% over 2024 imports.

The state ranked as the eighth-largest economy, were it among sovereign nations of the world, by nominal GDP, ahead of Canada, South Korea, Russia, and Australia, in 2022.

In 2024, Texas had a median household income of $79,721. As of 2024, the state had $73,032,946,298 in total outstanding state debt, including both general obligation of $16,611,730,000 and revenue debt of $56,421,216,298. With $8,348,956,000 of total debt issued including $1,235,430,000 general obligation and $7,113,526,000 revenue supported. Texas has the second largest population in the country, following California, as of 2025.

History

Historically four major business enterprises shaped the Texas economy prior to World War II: cattle and bison, cotton, timber, and oil. The first enterprise to enjoy major success in Texas was cattle and bison. In the early days of Anglo-American settlement, furs and hides were the major products derived from cattle. Beef was not particularly popular in the United States. However, Texas entrepreneurs soon pioneered the beef industry, and demand steadily increased. The cattle industry enjoyed its greatest financial success in the later 1870s and 1880s.

Cotton production, which had been known in Texas since Spanish times, gradually increased throughout the 19th century. By the early 20th century, Texas had become the leading cotton producer in the nation. By the 1920s, the cotton industry was past its peak, as government regulation and foreign competition took their toll.

Forests

The forests of Texas have been an important resource since its earliest days and have played an important role in the state's history. The vast woodlands of the region, home to many varieties of wildlife when Europeans first arrived, provided major economic opportunities for early settlers. They today continue to play an important role economically and environmentally in the state.

The densest forest lands lie in the eastern part of the state. In particular the Big Thicket region, just north of Houston and Beaumont, has historically been home to the most dense woodlands. The Big Thicket was mostly uninhabited until heavy settlement from the U.S. began in the mid-19th century, and was even used as a refuge by runaway slaves and other fugitives. The Rio Grande valley in South Texas was home to a large palm tree forest when Spaniards first arrived, though today very little of it remains.

The development of railroads in the eastern part of the state during the mid-19th century led to a boom in lumber production in the 1880s. This era of financial success lasted approximately 50 years finally coming to an end as Texas's forests were decimated and the Great Depression dropped prices.

Oil boom

In 1901 the Gladys City Oil, Gas, and Manufacturing Company struck oil on Spindletop Hill in Beaumont. Though petroleum production was not new, this strike was by far the largest the world had ever seen. The find led to widespread exploration throughout Texas and neighboring states. By 1940 Texas was firmly established as the leading oil producer in the U.S.

Texas remained largely rural until World War II though the success of the petroleum industry rapidly expanded the economy with heavy industry of many types taking root. The second world war created tremendous demand for petroleum and a variety of products that Texas was in a unique position to provide. By the end of the war Texas was one of the leading industrial states and the population had become predominantly urban. Additionally the economy had diversified sufficiently that, though petroleum was still the largest sector by the end of the war, the business community in the state was truly diverse.

The economy of Texas relies largely on information technology, oil and natural gas, aerospace, defense, biomedical research, fuel processing, electric power, agriculture, and manufacturing.

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