By George Slaughter, News Editor
The Houston-area economy continues to outperform the national economy, but concerns remain about a possible recession in 2023, an official with the Greater Houston Partnership said Tuesday.
Patrick Jankowski is the senior vice president of research for the partnership. He and Carlos Guzman, Fort Bend County Director of Economic Opportunity and Development, spoke at a meeting of the Katy Area Economic Development Council at the Embassy Suites, 16435 Katy Fwy.
Recession worries come as the pandemic recedes into the past. Jankowski said the Houston area lost about 359,400 jobs between March and April 2020 as the pandemic gripped the global economy. But from May 2020 to November 2022, 504,200 jobs were created locally, for a surplus of 144,800, Jankowski said.
But inflation remains a concern, and Jankowski gave some examples from grocery stores to illustrate this. In December 2019, he said, a loaf of bread cost $1.36. But by December 2022, that price had risen $0.51, or 37.4%, to $1.87. A gallon of whole milk, he said, costs $4.18, an increase of $1.02, or 32.1%, over the same period.
Jankowski said a pound of lean ground beef costs $6.39, an increase of $0.87, or 15.7%. He said a one-pound bag of potato chips costs $6.28, an increase of $1.75, or 38.7%.
But despite higher prices, Jankowski said higher prices would be the cure. In this way, the supply-demand cycle would even out and the inflation rate would fall.
Jankowski cited a Wall Street Journal poll conducted last October in which 63% of respondents believed a recession was imminent. Another poll, this one by the National Association for Business Economics, suggested that 62% of respondents thought such a recession would hit in the first quarter of this year, he said.
But such predictions do not necessarily come true. For example, Yankowski said, popular expectations of an easy Russian victory in its invasion of Ukraine did not materialize. Predictions of a Republican victory in the November 2022 election did not materialize. Predictions that Bitcoin would overtake the dollar have also not materialized.
A recession, should one occur, would have one of three outcomes, Jankowski said. The recession could be mild or a “near miss,” or it could be deep and protracted.
Some executives seem to have a feeling that a mild recession is on the way. Jankowski cited a Conference Board survey of 136 CEOs conducted in the final quarter of 2022. He said according to the survey, 44% of CEOs said they expect to expand their workforce over the next 12 months. This is a 6% decrease from 50% from 2021.
On capital spending, Jankowski said the same survey says 86% of CEOs expect their capital spending budgets to increase or stay the same over the next year. That’s a 4% increase from 2021, he said.
Jankowski said Houston’s economy remains in good shape. He cited statistics from the Texas Workforce Commission that initial jobless claims are at their lowest level since 2021. The purchasing managers’ index, tracked by the Institute for Supply Management-Houston, is 53.8, above the target of 50, he said.
The employment forecast is also likely to be strong, he said. According to research from the Greater Houston Partnership, even with a mild recession, the Houston area can expect 60,000 job growth. A “near miss” situation is expected to result in approximately 80,000 new jobs. A deep recession is expected to result in about 30,000 jobs, he said.
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