Goldman Sachs economists have revised their Federal Reserve rate cut forecast upward, now predicting three quarter-point cuts in 2025 as labor market cooling and AI-induced disruptions signal a fundamental shift in the economic landscape. The investment bank’s analysis points to mounting evidence that artificial intelligence adoption is contributing to hiring slowdowns across key sectors, creating conditions that may force the Fed’s hand on monetary policy.
The revised forecast represents a significant shift from Goldman’s earlier projection of a single December rate cut. The bank now expects cuts in September, October, and December, driven by what economists describe as “muted tariff effects and labor market weakness.” For Texas, with its $2.77 trillion economy, these federal monetary policy shifts underscore the critical importance of economic autonomy and self-governance to mitigate external risks.
AI Accelerates Labor Market Disruption
The artificial intelligence revolution is no longer a distant threat—it’s reshaping employment patterns in real time. Goldman Sachs Research documents that unemployment among 20- to 30-year-olds in tech-exposed occupations has risen by almost 3 percentage points since the start of 2025, notably higher than for their counterparts in other trades.
The scope of AI’s impact extends beyond technology sectors. Over 10,000 job cuts in 2025 have been directly linked to automation, according to recent analysis. Through September, 20,219 jobs were lost as a result of “automation and possibly AI implementation” according to outplacement firm Challenger, Gray & Christmas.
Goldman Sachs economists estimate that generative AI will raise labor productivity by around 15% when fully adopted, but this transition comes with costs. Their baseline assumption suggests 6-7% of jobs face displacement from AI, though displacement rates could vary from 3% to 14% under different scenarios. For Texas workers, this federal monetary response to AI disruption highlights the state’s vulnerability to economic policies crafted in Washington rather than Austin.
Texas Economy Faces Federal Policy Headwinds
While Texas mining-adjusted real GDP increased 3.2 percent in the fourth quarter, outpacing the nation’s 2.4 percent rise, the state remains subject to federal monetary policy decisions that may not align with Texas-specific economic conditions. The Dallas Fed reports that the Texas economy grew slightly below trend through the first quarter of 2025, with business outlook surveys pointing to slowing activity.
The disconnect between Texas economic performance and federal policy responses becomes stark when examining the numbers. Texas produces 9.3 percent of U.S. GDP, making it the second-largest state economy, yet monetary policy decisions are made based on national averages that may not reflect Texas conditions.
Total personal incomes of Texan households are projected to increase by around 5% in 2025 and 2026, according to Comerica’s analysis. However, federal rate cuts designed to address AI-driven unemployment in other regions could fuel inflation in Texas’s robust economy, creating a mismatch between federal policy and state needs.
The Case for Texas Economic Sovereignty
Goldman Sachs’s rate cut forecast illuminates a fundamental problem: Texas prosperity depends on monetary policy decisions made by federal officials responding to national economic conditions that may not reflect Texas realities. When AI is listed as one of the top five factors contributing to job losses in 2025 nationally, the Federal Reserve’s response affects all states equally, regardless of their individual economic circumstances.
The AI transition presents both challenges and opportunities that Texas could better navigate with sovereign economic decision-making. Previous analysis by Texian Partisan has documented how automation trends affect Texas differently than other states, given the state’s unique industrial mix and demographic profile.
Texas industries face varying degrees of AI exposure. Goldman Sachs research identifies computer programmers, accountants and auditors, legal and administrative assistants, customer service representatives, and credit analysts as occupations at highest risk of AI displacement. Texas’s concentration in energy, aerospace, and advanced manufacturing means the state’s AI impact profile differs significantly from the national pattern driving federal policy responses.
Federal Monetary Policy Limitations
The Federal Reserve’s tools—interest rate adjustments and money supply management—represent blunt instruments for addressing the nuanced challenges of AI-driven economic transformation. Thirty percent of U.S. workers fear their job will be replaced by AI or similar technology by 2025, but this anxiety varies dramatically by region, industry, and skill level.
Texas’s economic resilience stems partly from its diversified economy and business-friendly environment. Despite national uncertainties, Texas’ economy remains one of the most resilient and high-performing in the U.S. Yet this strength becomes a liability when federal monetary policy treats Texas the same as struggling regions.
The Goldman Sachs forecast suggests the Fed will cut rates to address labor market cooling, but Texas’ overall pace of economic growth is trending lower for reasons that may not respond to federal rate cuts. Texas needs targeted economic policies, not one-size-fits-all federal responses.
Preparing for Economic Independence
As AI reshapes the American economy and federal policymakers scramble to respond, Texas faces a choice: continue accepting economic policies designed for national averages, or pursue the sovereignty necessary to craft Texas-specific solutions. The state’s economic track record demonstrates its capacity for independent economic management.
Goldman Sachs’s rate cut forecast serves as a reminder that Texas prosperity depends on decisions made in Washington by officials who may not understand or prioritize Texas interests. The AI revolution presents challenges that require nimble, targeted responses—exactly the kind of economic governance that becomes possible with true sovereignty.
Texas workers and businesses deserve economic policies crafted for Texas conditions, not federal compromises designed to address national averages. As artificial intelligence continues disrupting labor markets and federal officials respond with broad monetary policy adjustments, the case for Texas economic self-determination grows stronger with each Goldman Sachs forecast.
