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Federal Reserve senior economist does not foresee 2023 recession in Texas

Joey Palacios
Texas Public Radio
Leisure and Hospitality, one of San Antonio's biggest industries, was also one of the biggest job creators statewide in 2022.

No recession in Texas in 2023. So says Pia Orrenius, a vice president and senior economist with the Dallas Federal Reserve.

During her economic forecast on Friday, she said job growth will be in positive territory for the state this year.

"We expect to grow one-point-four percent this year. That is consistent with a soft landing in Texas. "We're not forecasting recession," she said.

That means 193,000 new jobs are expected to be created in Texas this year.

Orrenius said inflation still weighs on Texas families, so it's important for the Fed to rein it in. She said the state's energy sector and healthy migration rates are economic shock absorbers for Texas that the rest of the nation does not share.

Orrenius said all job sectors ended 2022 on a growth note. Energy jobs led the way, up 13%. The biggest job increases were also seen in leisure and hospitality, and information services.

She said job growth this year will not match the 3.5% recorded in 2022, but it should be enough for Texas to make a soft economic landing.

"The Texas economy is forecast to grow more slowly this year and likely below trend, but we're not projecting it to contract."

She said higher mortgage rates due to the Fed's interest rate hikes have slowed the Texas housing market and home prices have been falling.

She said Austin home prices have taken the sharpest dip in Texas, down by 9%. She noted, however, that the Capitol City also saw the biggest home value gains in 2022. She said overall — despite the dropping prices — Texans should retain some of those increased home values in 2023.

She said consumer lending is down and delinquencies on consumer loans, like those on vehicles, are up in low-income areas.

Orrenius said office vacancies are up in major Texas cities since many Texans are still working from home during the pandemic.

She did have one cautionary note. She said if a deep national recession were to strike in 2023, Texas could be dragged into one of its own.

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