The first bit of good news out today: the national average price for a gallon of regular gas, according to AAA, dropped below the average price at this time last year.
The second bit was that the chief economist at the Greater Houston Partnership says Houston is positioned better than most major cities, creating many new jobs that will likely make a possible recession mild.
Greater Houston Partnership Chief Economist Patrick Jankowski says Houston has a 50% chance to have a mild recession in the first quarter of 2023, a 30% chance for no recession, and only a 20% chance for a deep recession.
"Houston's economy and the U.S. economy are much stronger than people believe. If you look at reports on employment, retail sales, GDP, they’re all coming in stronger than economists thought," said Jankowski.
While some people could face layoffs in a possible recession, overall Jankowski expects Houston to gain nearly 61,000 jobs, saying growth will be the strongest in construction, energy, government, health care, professional services, and restaurants.
"The oil and gas industry continues to inch up. It’s not quite back to where we’d like to be, but we’re still seeing drilling going on out there," explained Jankowski.
He says he expects the escalation of home prices to soften or flatten, and the Fed to slow down on raising interest rates.
"We expect them to pull back at their next meeting. I can see them pulling back even more after the first of the year," said Jankowski.
Meanwhile, AAA reports the national average for a gallon of regular gas is now below where it was a year ago, at $3.33. In Houston, the average is even lower at $2.75.
"The basic driver of what’s going on right now is a relatively slow world economy, and China's economy, largely as a result of their zero COVID-19 policy and associated lockdown," explained Dr. Craig Pirrong with the University of Houston.
Some analysts say the national average could soon fall below $3, but that could depend on whether China lifts its lockdown.
"If they continue with this, we’ll continue to see prices low. If they relax a little bit, and that rejuvenates their economy, then we’ll see prices go back up," said Pirrong.
Major job growth is why Jankowski says Houston will weather a possible recession well. He says the area added 176% of the jobs lost in the pandemic.