U.S. ECONOMIC OUTLOOK

• The U.S. economy continues to grow despite rising interest rates, a plunge in new home construction, the ongoing war in Ukraine, concerns over a new COVID variant, and a looming recession in Europe. The long-anticipated recession has yet to arrive.
• U.S. gross domestic product, the most comprehensive gauge of the nation’s economic health, grew 3.2 percent in Q3 2022, adjusted for inflation. That’s up from a decline of 0.6 percent in Q2 2022 and a drop of 1.6 percent in Q1 2022.

THE BIG PICTURE

• The broad outlook for the U.S. economy looks weaker now than it did in the early fall, according to the 38 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The forecasters expect real GDP growth to slip to near zero in Q1 2023 and Q2 2023 before rebounding in Q3 2023. They expect GDP growth to average 0.7 percent this year and 1.8 percent next. Job growth will slip; unemployment will rise as well.

TEXAS GDP

• BEA estimates Texas’s GDP at $2.1 trillion in ’21, second only to California ($3.5 trillion) but ahead of New York ($1.9 trillion) and Florida ($1.3 trillion). Texas accounted for 8.8 percent of U.S. GDP at the end of ’21, compared to 14.6 percent for California, 8.0 percent for New York, and 5.4 percent for Florida.

EMPLOYMENT UPDATE

• Houston added 14,500 jobs in November ’22, according to TWC. That’s weaker than expected. In twelve of the last 20 years (’02 – ’21), the region created 15,000 or more jobs in the month. In the years in which Houston created fewer jobs, Houston was entering a recession or already in one. This November’s performance hints that a slowdown in the local economy may be underway.

KEY ECONOMIC INDICATORS

• Construction — Metro Houston construction starts totaled $30.2 billion through November of this year, up from $18.7 billion over the comparable period in ’21, according to the latest data from Dodge Data & Analytics. Nonresidential activity increased from $8.2 billion to $16.7 billion and residential activity held steady at $13.5 billion.
• Crude Oil — The closing spot price for West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $76.44 per barrel in December ’22, up from $71.71 for the same period in ’21. This is the first month WTI dropped below $80 since last December. The U.S. Energy Information Administration forecasts WTI to average $95.22 per barrel this year and $86.38 in ’23.
• Unemployment — The unemployment rate for metro Houston was 4.0 percent in November ’22, down from 4.1 percent in October ’22 and 5.1 percent in November ’21. The Texas rate was 3.7 percent, down from 4.5 percent the year prior. The U.S. rate was 3.4 percent, down from 3.9 percent in ‘21. The rates are not seasonally adjusted.

Source: Greater Houston Partnership