Houston expert: Job growth, consumer spending suggests healthy economy

While a national recession is unlikely in the next year, the Houston metro is well-positioned to overcome the next economic downturn, said Patrick Jankowski, senior vice president of research and chief economist at the Greater Houston Partnership.

The region has recovered 174% of the jobs lost in the COVID-19 pandemic, adding another 280,000 jobs since recouping the losses, Jankowski said. Meanwhile, other metros have struggled to recover jobs lost during that time.

“If you just barely recovered from the last recession and you enter another recession, it is really going to hurt,” he said at the Cy-Fair Houston Chamber of Commerce luncheon Nov. 19.

The overview

The Houston region added 60,200 jobs in the past 12 months, according to data from the Texas Workforce Commission. Jankowski shared the following highlights:

• The construction job sector has remained strong despite previous concerns about climbing interest rates’ impact on the real estate market.
• Health care jobs have continually grown to accommodate a growing and aging population.
• Wholesale trade jobs are growing to support logistics services.
• Administrative support saw the largest declines, likely due to the need for contract workers diminishing as the economy recovers.

Jankowski also said the oil and gas industry doesn’t drive the economy to the extent it did for many decades in Houston.

Advancements in the energy industry have led to increased production without the need to add more workers, he said. Oil and gas jobs have not yet reached pre-pandemic levels, and yet oil production has steadily increased since 2021.

Zooming out

Consumer spending accounts for about two-thirds of all economic activity, and Jankowski said U.S. consumers continue to spend more and more, helping to support other aspects of the economy.

Although U.S. job growth was weak in October due to hurricane recovery happening on the East Coast and 45,000 Boeing workers being on strike, Jankowski said the nation’s labor market is fairly healthy with no recent spikes in unemployment.

On the other hand, home sales nationwide have reached the lowest level in nearly three decades due to high interest rates, Jankowski said.

When it comes to inflation, the areas generally seeing the highest rates of cost increases are services depending on labor, including:

• Car insurance: Up 16.3% year over year
• Lawn services: Up 10.4% year over year
• Sporting event tickets: Up 10.3% year over year
• Home health care: Up 8.7% year over year
• Health insurance: Up 7.5% year over year
• Veterinarian services: Up 6.7% year over year
• Vehicle repair: Up 6% year over year
• Day care and preschool: Up 6% year over year

Jankowski said he’d like to see inflation hit about 2%, but it’s been on the decline for several months and was 2.6% in October—down from 9.1% in mid-2022.

“The U.S. economy is actually pretty strong,” Jankowski said. “We might not feel that way because of inflation, … but overall, the U.S. economy really is in pretty good shape. And it’s important that the U.S. economy grows because so much of Houston’s growth is tied to the U.S. economy.”