McAllen metro is still adding jobs, but the pace is slowing, Dallas Fed economist says

After several years of significant economic expansion and job growth, the McAllen-Edinburg-Mission metro area has slowed down, even below the statewide average, a Dallas Federal Reserve business economist shared with executives on Thursday afternoon at the McAllen Chamber of Commerce. 

“I think it has to do with the close border manufacturing activity between McAllen and Reynosa. What we have seen in the first half of the year was that lots of companies were importing goods from Mexico,” Jesus Cañas, a senior business economist at the Federal Reserve Bank of Dallas, told the Rio Grande Valley Business Journal. “And they were doing it massively to avoid some of the tariffs. So we had a lot of increase in U.S.-Mexico trade, and the border region benefited from that, from the service [industries].” 

McAllen’s gross domestic product in 2019 was $23 billion. Data shows there was one year of stagnation during 2020. But then there’s been an uptick each year, until GDP hit $30.2 billion in 2023—the most recent year available. 

A key indicator to watch is the new U.S.-Mexico-Canada agreement, known as the USMCA, the next generation of NAFTA (the North American Free Trade Agreement), which enabled border regions to grow through logistics and trade. 

“If we have this [high tariff] trade policy around the world but the region continues to have better terms for trade, it’s going to be a good opportunity [for the border region],” he said. “And we have seen some of that happening. There is an incentive for all these companies to comply with the USMCA rules [for lower tariffs] and that’s what we have seen.” 

The Texas economy, when measured by job growth, typically expands about 2% each year. 

But the number of jobs in Texas has grown by 1.2% from January through August, according to economic data. 

The federal government shutdown has delayed the release of job data in September and October. On Nov. 12, President Donald Trump signed a stopgap bill to continue funding the government, but it’s unclear whether the economic data will be retroactively released. 

Houston and Dallas are expected to grow anemically by 0.2%, while Fort Worth is expected to grow by 0.7%, and McAllen by 0.8%. 

Faster job growth is shown in Austin (1.4%) and San Antonio (3%) through August 2025. 

Restrictions on U.S. immigration and the use of artificial intelligence have slowed job growth. Inflation relief has slowed, too. 

While tariffs did increase the costs of goods and services, but not as much as businesses surveyed by the Dallas Federal Reserve predicted at the beginning of the year, he said. 

More people are still moving into Texas from other states than leaving, but the net domestic migration trend has slowed in 2024 and continued to slow in 2025. International migration to Texas had surged between 2022 and 2024, but has since curtailed. 

Nearly 60% of Texas companies surveyed by the Dallas Federal Reserve in April expected higher tariffs to negatively impact their businesses, a figure that has since dropped to 35% in September.