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Business Journals
23-04-2025
- Business
- Business Journals
Houston economy poised for growth despite recession fears
By submitting your information you are agreeing to our Privacy Policy and User Agreement . A growing workforce and affordability are positives for Houston, though the region could be particularly affected by changes in immigration policy. A national economist explains why Houston is well positioned despite increased recession fears. Story Highlights Houston's economy is well positioned amid increased recession fears, economist Jeff Korzenik says. Houston leads U.S. metros in GDP growth and consumer confidence. Tariffs and immigration policies could put pressure on the local economy. When it comes to the economy, location matters, one national economist says. That's good news for Houston. The Houston region is well positioned for growth despite increased fears of a recession, Jeff Korzenik, chief economist for Cincinnati-based Fifth Third Bank, said at a Greater Houston Partnership luncheon on April 23. In-migration, affordability and workforce productivity point to positive signs for the local economy, he said. GET TO KNOW YOUR CITY Find Local Events Near You Connect with a community of local professionals. Explore All Events The Houston metropolitan area and multiple Houston-area counties are among the fastest-growing places in the U.S., according to recent data from the U.S. Census Bureau. Meanwhile, Houston has the third-lowest cost of living among the 18 largest U.S. metros, and the annual cost of living in Houston is about 25% less than the national average. Additionally, the Houston region leads the top 20 U.S. metropolitan areas for two-year GDP growth, increasing 25.1% between 2021 and 2023 to $697 billion. 'Place matters because if you think about what drives an economy, it's two things: how fast you can grow your workforce and how fast you can grow the productivity of your workforce,' Korzenik said. 'Those geographies that can grow their workforce have a decided advantage because companies follow workers now, rather than workers following them.' He also said: 'We think there is going to be greater geographic dispersion of (gross domestic product) in the years ahead. Houston is well positioned for that.' Positive signs in the economy Korzenik's confidence in Houston — as well as in Texas, more broadly — comes as recession risks have gone up 'substantially' in recent months. Korzenik pegged the chance of a recession this year at about 35%, which he admitted is just an educated guess. Notably, a recession this year is not Korzenik's baseline assumption for the economy, though. 'We still believe that the base case for the U.S. should be a year of continued economic expansion, not a recession,' Korzenik said. Additionally, Korzenik said the 'single most important recession indicator" he is looking at is initial unemployment claims. Weekly claims have been around the low 200,000s, far from the 400,000 to 500,000 weekly claims that would cause Korzenik to worry, he said. As it relates to consumers, aggregate debt burdens — how high debt payments are relative to income — are low, giving consumers resiliency. However, lower-income consumers are worse off, and the top 10% of earners — those who earn $250,000 or more — account for just under 50% of spending. 'We have good news here, but we are on a somewhat precarious base,' Korzenik said. 'We're relying on a small subset of consumers.' However, consumer confidence is slipping nationwide, exclusive data from global decision intelligence company Morning Consult shows. The Houston region leads the nation in consumer confidence, though, suggesting continued strength in the local economy. Additionally, business confidence has risen as the Trump administration promised deregulation and lower taxes, Korzenik said. However, unlike what typically occurred in the past, that confidence has not resulted in an increase in capital expenditures yet. Tariffs have also caused a slight pullback in confidence recently, Korzenik added. Economic implications of tariffs, immigration policy Tariffs have the potential to have positive long-term outcomes if done right, Korzenik said, an opinion shared by JPMorgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon. President Donald Trump's new tariff policies will put pressure on inflation and likely limit the number of interest rate cuts from the U.S. Federal Reserve, Korzenik said. He expects inflation to close the year at about 4% to 5% and the Fed to cut short-term interest rates possibly one or two times. Any more cuts than that may signal that a recession is becoming more likely, Korzenik said. Korzenik said the Trump administration's goal to bring back manufacturing jobs would be a boost for the economy, but current policies are the wrong strategy. Korzenik deferred to economist Peter Navarro's suggestion as the 'right' tariff policy, which would be to gradually implement a 10% universal tariff. Bringing back manufacturing jobs would help alleviate the labor shortage issue that is beginning to fester again, Korzenik said. Unlike in the past, there are more job openings than there are job seekers, putting pressure on businesses and driving wage inflation — a trend Korzenik said is the 'new normal.' That issue may worsen given the Trump administration's immigration stance, Korzenik said. The U.S. relies heavily on foreign-born labor. Since 2021, 5.9 million immigrants have joined the labor force, making up the majority of labor force gains over that time period. However, just 1.5 million of those workers are those who have gone through legal pathways to full U.S. citizenship, while the rest are asylum seekers, refugees and those in the country illegally. The flow of foreign-born labor is coming to a halt, a trend that began during the 2024 election cycle, Korzenik said. More than that, he said it would be 'naive' to think that policies won't affect the current immigrant workforce, he said. There could be upcoming decisions that would take away many of these people from the overall labor market. Immigration policy would put particular pressure on Texas, Korzenik said. Estimates show that 10.4% of the state's labor force comes from immigrants in the country illegally, second only to California, he said. 'We've relied too much on a labor force that, under current law, may evaporate,' Korzenik said. 'We think this means that labor shortages are going to come back, it's going to be visible, and it will put upward pressure on inflation.' Sign up here for the Houston Business Journal's free morning and afternoon daily newsletters to receive the latest business news impacting greater Houston.
Axios
16-04-2025
- Business
- Axios
Houston's district leads nation in China exports as trade tensions rise
Texas is America's top exporter to China, and Houston's 38th Congressional District led all U.S. districts in goods exports to China in 2023, according to the U.S.-China Business Council. Why it matters: Those trade ties are now caught in a fast-escalating trade war, with billions of dollars and thousands of jobs at stake. Catch up quick: China announced last week that it would subject most U.S. goods to 84% tariffs in retaliation for Trump's 104% tariffs — which Trump promptly raised to 125%, then again to 145%. Trump paused reciprocal tariffs for 90 days, except those against China, which he blasted for retaliating. State of play: Texas exported an estimated $26 billion worth of goods to China in 2023, the council says in its latest report. The bulk came from oil and gas ($12 billion), followed by basic chemicals ($2.9 billion), resins and synthetic fibers ($2.5 billion), industrial machinery ($1.6 billion), and semiconductors and components ($1.5 billion). The state's goods and services exported to China supported 89,530 American jobs in 2022, per the council. Zoom in: The 38th Congressional District, which includes northwest Houston and stretches into Tomball, exported $4.9 billion in goods in 2023 — $4.5 billion of which came from oil and gas, per the council. According to the Greater Houston Partnership, China is Houston's biggest trading partner, with $9.7 billion in exports to China in 2024. 46 Houston firms operate 140 subsidiary locations in China, including American Bureau of Shipping, Crane Worldwide Logistics, Huntsman International, LyondellBasell Industries and National Oilwell Varco, per GHP. The bottom line: If President Trump's recently announced sky-high tariff rates remain in place, many U.S. companies will no longer be able to compete in China's market.
Axios
04-03-2025
- Business
- Axios
Trade war escalation: Texas to face the biggest blow from Trump's tariffs
Texas stands to take the hardest hit of any state under the Trump tariffs on Mexico, Canada and China, leaving businesses and consumers bracing for higher prices and economic fallout. Why it matters: If foreign goods cost 25% more, someone has to absorb the difference — either businesses or consumers. Some estimates suggest the new tariffs could cost the average U.S. household $830 a year — and that's before factoring in likely retaliatory tariffs from Canada, China and Mexico. State of play: Trump triggered a global trade war with the biggest U.S. trade partners on Tuesday by slapping 25% tariffs on exports from Canada and Mexico and 20% on China. The tariffs on imported goods could cost the Texas economy an estimated $47 billion, per economic research firm Trade Partnership Worldwide. The big picture: The tariffs will affect big-ticket items like cars and machinery, but also consumer staples — everything from groceries to beer and oats. The impact will be especially sharp on goods that are harder to produce domestically, including agricultural products. Threat level: Because Texas is deeply integrated with supply chains — from Mexico, in particular — the state will more heavily feel the strain, Tony Payan, the director of the Center for the U.S. and Mexico at the Baker Institute, tells Axios. "Because Texas is the origin, destination or transit point of two-thirds of binational trade, clearly, Texas will be more affected than other states that are not as integrated," he says. What they're saying: "Texas values the strong economic partnerships we have built with Mexico and Canada, our two largest trading partners," Justin Yancy, president of the Texas Business Leadership Council said in a statement. "The imposition of these tariffs on our neighboring countries will disrupt supply chains, increase costs for businesses and families and create unnecessary barriers to economic cooperation," Yancy added. Glenn Hamer, president and CEO of the Texas Association of Business, told Texas Public Radio that his organization is very concerned tariffs will "harm what has been record employment in the state of Texas." "And I'll also say we're concerned for the consumer," Hamer added. Case in point: Texas-based automotive giants General Motors in Arlington and Toyota in San Antonio face mounting pressure. Arlington Mayor Jim Ross and San Antonio Mayor Ron Nirenberg warn that rising production costs could lead to higher car prices, weakened demand and potential job losses in their cities. Zoom in: China is Houston's top trade partner, followed by Mexico, with $31.8 billion and $28.7 billion, respectively, in trade value in 2023, according to the Greater Houston Partnership. If Mexico retaliates with its own tariffs, Houston's oil and gas industry — which supplies oil to Mexico — will take a hit, Payan says. What we're watching: How the cards fall, how businesses respond, which countries retaliate and how it'll impact Americans wallets.
