Happy Thursday! Hope you are keeping dry on this rainy day!
We went to the Greater Houston Port Bureau’s (GHPB) Commerce
Club Luncheon at the Houston Marriot South at Hobby Airport today.
The speaker was Jesse Thompson. He is a Senior Business Economist at the
Houston Branch of the Federal Reserve Bank of Dallas. We enjoyed his talk! He had a few good one liners which gave the
audience a nice laugh or a big grin! Let’s discuss what was said!
Mr. Thompson gave us a talk on the
basics of the Federal Reserve 101, and their Outlook Trends 2025, “The Return
of the Trend?” The business conditions
of the last two months is not necessarily a trend nonetheless they are noteworthy
events! Mr. Thompson tried to touch on a
bunch of areas from investment and construction to oil and gas and energy to
labor markets, wages and immigration, and to real estate. Mr. Thompson’s broad overview was a lot to
take in. Investment and new construction
are currently robust and well supplied with materials and energy. This well supplied energy market is oil and
gas and it is especially influencing to Houston and Texas, and this makes our
area especially volatile to its ups and downs.
OPEC has done a good job of not flooding the market which has stabilized
prices. When the sanctions are lifted on
Russia and Iran, this will not increase the amount of oil produced it will only
increase the value of it for them. The
two countries were drilling the whole time.
American liquified natural gas (LNG) has been in the negative numbers
which means we need to export more. New
LNG capacity has been delayed nonetheless we are still on pace. Oil wells have been better at producing due
to improved techniques and current wells are getting longer which has the oil
flowing. Producers can do more with
less! A current survey of the Fed was
recently released, and the current prices of barrels of oil is still supportive
of upstream or the producers. In 2024,
to break even the average price of oil per barrel had to be approximately $64,
currently it needs to be approximately $65. The survey found currently for
production, less than $2 a barrel is going to regulatory compliance for legal
and administrative costs. The Fed is
expecting U.S. crude oil to slow output growth and in the next two years things
will slow down and more layoffs are expected.
The Fed expects more Merger and Acquisitions too. The oil and gas sector has been affected by
the new policies and regulations coming into play which is causing confusion
and uncertainty which is not good to us here in Houston and Texas.
Mr. Thompson spoke a little broader
on the overview of the other topics. There
is uncertainty in the markets according to the Fed. The U.S. GDP looks like it is on course for
growth with full employment, nonetheless the risks are rising. The US has continued progressing towards the
2% inflation nonetheless tariffs are coming.
Tariffs are expected to influence it at least at first nonetheless the
markets are expected to stabilize.
Houston/Texas job growth for 2025 is around 1.9% and they are expecting
it to maintain. They do not expect job
growth in our area to be influenced by the tariffs. Consumers have slowed spending and there was
a jump in imports hence the first quarter of 2025 numbers have been down. American exports recently have been
slow. There are signs the labor market
will be softening. Normal wage growth in
the U.S. is still elevated and will be slowing nonetheless the Houston/Texas
wage growth is still hot. International
migration surged in 2024 which has helped the U.S. especially Texas with
population growth, and growth should be in the healthy range. In Industrial Construction, semiconductors
are being heavily invested in, and chemicals are doing well. In Texas, it is outpacing the rest of the
U.S. in big capital projects for semiconductors, warehouses, data centers which
are springing up everywhere. Residential real estate has kept a lid on things
due to the high interest rates and home value growth has slowed. In Houston/Texas, the values have been
pressured by high rates and new supply, and when adjusted for inflation home
values are down. Office and industrial
real estate vacancies are rising and tempering demand. Well, this is a snapshot of things Mr.
Thompson spoke about today! We hope it
encourages you to come to the next Commerce Club Luncheon!
Mr. Thompson made a request for
us to answer the Dallas Federal Reserve's surveys.
Every six weeks, they go over them and it helps with real time answers. You may check out the Federal Reserve of
Dallas’ surveys by clicking the link: Surveys - Dallasfed.org.
Thank you, Jesse Thompson! You are an interesting and informative
speaker, and we enjoyed the quick macroeconomics lesson on today’s markets! And a few good laughs!
As you see the speakers at the GHPB’s Commerce Club Luncheons bring an informative talk to all that attend. The next Commerce Club Luncheon is April 10, 2025, at 11 a.m. The guest speaker at the next luncheon is Phyllis Saathoff, Executive Director/CEO of Port Freeport. Ms. Saathoff will be speaking on the happenings of Port Freeport. Please check out the website, if you would like to learn more; April 2025 Commerce Club Luncheon - Greater Houston Port Bureau.
If you would like help in
figuring out how to get your product moving with less of a carbon footprint,
contact us via the email on the Blog or give us a call: 281-901-5554. Check out our ESC website!
We hope you have a great and
productive rest your week! Keep dry!