ICOnic News | Houston's Economic Outlook for 2025: No Recession in the Forecast
HOUSTON'S ECONOMIC OUTLOOK FOR 2025: NO RECESSION IN THE FORECAST
At the January CCIM Luncheon, Patrick Jankowski, Chief Economist with the Greater Houston Partnership, shared his review of the previous year and upcoming predictions for 2025. His outlook for the Houston economy is optimistic based on multiple indicators including:
Consumer spending is increasing
Inflation rates are significantly lower at around 2%
Commodity inflation is briefly negative (but services inflation is still higher)
Unemployment rates have stabilized at 4% for the last couple years
Unemployment benefit payouts are stable
According to the Wall Street Journal and a polling of economists throughout the US, there is no recession in the forecast for 2025 and not likely even through 2026. Jankowski emphasized that if the US economy continues to do well, so will Houston.
However, a couple concerns that Jankowski mentioned with Washington include oil prices, tariffs and immigration. As of January, the average cost to drill is $64/barrel. OPEC is continuing to hold 2-4 million barrels off-line, along with other non-OPEC sources, which will affect future pricing. The new administration is in discussions about implementing tariffs which could cause a decline in trading. This kind of decline could hurt Houston's $136 billion worth of annual exporting business. With Houston being such a diverse city, 1 out of 4 Houstonians are born outside the US (1.8 million people). With increased immigration restrictions, Jankowski notes that we could see a shortage of workers.
Jankowski did discuss the health of Houston's job numbers. In April 2024, Houston recovered all lost jobs from the pandemic and is now seeing an all-time increase. Houston has done great at creating new jobs and in fact, Texas added more jobs in 2024 than any other state in the country. We are seeing job increases throughout the professional and business services, tech services, construction and healthcare sectors. Energy no longer exclusively drives Houston's economy.
Office vacancy is highest in Class A space at 27% and only 9% in Class C space. Industrial vacancy is at 7.1% and all the new industrial construction being built is being absorbed. Multi-family rates are down for Class A product due to oversupply.
For 2025, Jankowski predicts that there will be 71,200 jobs added for 2025, and we will see continued growth in healthcare and construction. Houston has seen over 2 million net job gain over the last 40 years and has become resilient to outside factors. Jankowski has no doubt that we will continue to see that resiliency in 2025.
- Jane Nodskov, ICO Senior Partner - Office and Industrial Specialist
MAKING GOALS WORK: FIVE STEPS TO ACHIEVE MORE IN 2025
1. Link individual goals with your broader, company goals.
Everyone should know how their role helps you achieve your company's top-level goals. For example, if you want more sales, everyone plays a part. Reception responds to every inquiry promptly and courteously. Your market researcher helps you know who to focus on. HR helps conduct sales training. Accounting helps speed up A/R so you have more cash for marketing. Operations helps each client have a fabulous experience so you get more referrals.
2. Set process goals (what you will do), not just result goals (what you will get).
It's easier to focus on a sensible next step, rather than sorting out all the options for achieving a result. For example, the results goal of "get more leads" could be restated as a process goal that moves you toward that result: "Make 3 engaging social media posts per week." Or instead of the fuzzy goal "Improve customer satisfaction," use a clear process goal like "Interview one client per month and understand their needs and write down how we can improve."
3. Decide upfront how and when you will review your goals.
Build in some accountability without micromanagement. You don't need fancy OKR software to start. Just set up a schedule in a shared spreadsheet.
4. Write down your goals.
This helps you focus, and keeps you accountable. You can share your goals and help each other.
5. Don't expect perfection.
The best companies allow people to aim high and to sometimes fail. If you require 100% goal success, you will stifle innovation. Create an after-action report for goals that were not met. What was our progress? What did we learn? What do we need to overcome? How?
