In 2008, Texas had a gross state product of $1.224 trillion, the second highest in the U.S. The Gross state product per capita as of 2005 was $42,975.

Texas had the second largest workforce in the United States, with almost 11 million civilian workers. The lack of personal income tax as well as the largely undervalued real estate throughout Texas has led to significant growth in population. Since 2003, the legislature in conjunction with the Governor's office has made economic development a top priority.

Much economic activity in Texas is regional. For example, the timber industry is important in East Texas's economy but a non-factor elsewhere. Houston, the state's largest urban economic enclave stands at the center of the petrochemical, biomedical research trades, shipping, and aerospace (particularly NASA). Dallas/Fort Worth houses the state's predominant defense manufacturing interests and the expansive information technology labor market. West Texas and the panhandle is dominated by ranching and the petroleum industry.[citation needed] Austin's economy is dominated by the State Government, Educational Institutions, and the booming IT Industry.

Texas's growth can be attributed to the availability of jobs, the low cost of housing, the lack of a personal state income tax, the quality of higher education, low taxation and limited regulation of business, a central geographic location, a limited government, favorable weather, and plentiful supplies of oil and natural gas. There are currently 35 billionaires residing in Texas today.

Texas has the highest number of Fortune 500 company headquarters in the United States, fifty-eight. This has been attributed to both the growth in population in Texas and the rise of oil prices in 2005.

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 soon Texas entrepreneurs 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.

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 1800s, 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 1800s 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' forests were decimated and the Great Depression dropped prices.