Houston economist still bullish on SETX, U.S. overall
The biggest threat to the U.S. right now might be psychological.
Texas economist Patrick Jankowski told a group of local business leaders Wednesday to be skeptical of the growing speculation about whether a recession is imminent. He is more worried about the a self-fulfilling prophecy. Nothing in the available data, he stressed, suggests there’s anything to derail the current expansion.
“An event has to happen to trigger a recession,” he said, citing real estate bubbles, oil price shocks and high debt that have launched previous downturns. “It just doesn’t happen because we are overdue. It’s not like an overdue library book or bread that has gone stale.”
Around December, several financial and investment institutions released research notes on the probability of a recession, including a report from JPMorgan that moved its prediction of a recession from 16 percent to 35 percent.
While certain short-term indicators did suggest an increased chance for economic downturn, Jankowski, senior vice president of research for the Greater Houston Partnership, said federal economic data appeared to show the opposite.
“A 3.9 percent unemployment rate is a really tight market and, even in that, we added around 300,000 jobs,” Jankowski said. “The fact people are re-entering the labor force tells me people feel it is worth working again.”
Interest rates remain comparatively low and trends in commodity rates have actually caused concern that prices may continue to slip. While larger barrel prices mean better margins for oil companies, Jankowski said it could still be a profitable period if prices stabilize around $50 to $55 a barrel.
In Texas, the economy has reached over $1 trillion in real GDP and unemployment steadily reduced since 2000 to below 4 percent.
Jim Rich, executive director of the Southeast Texas Economic Development Foundation, said Jankowski’s presentation added context for the local development community, but it was also familiar news to people observing the growing in southeast Texas.
“We see what’s coming, and its unparalleled, historically low unemployment and historic job growth,” Rich said.
Locally, GDP for Beaumont over the past 16 years rose steadily until a dip in 2017 that corresponded with Tropical Storm Harvey. The GDP for the Beaumont-Port Arthur metropolitan area was valued at $25 billion in 2017.
Jankowski said he expected the area would see a “tremendous jump” in GDP from recovery activity, but also because of a number of new investments from the petrochemical industry. He also expected employment to start growing with construction and full-time positions added to meet the need of expanding companies.
Jankowski cited concern that talk about an impending downturn would cause people to postpone hiring or investment decisions, creating a domino effect that would stall economic growth.
He said media outlets are reporting what they are hearing from economists, but the outcome may be slightly distorted from the facts due to the nature of news cycles.
“It’s easier to write about conflict or something that is dramatic, but it’s dull to write about things being the way they’ve always gone,” Jankowski said. “I think it is a misinterpretation of the data.”