From Staff Reports
Economic forecasts are tricky, what with so many state, national, and global variables at play (to say nothing about how a devastating weather event such as a hurricane or winter storm can reshuffle the deck mid-year).
But using their collective understanding of current economic and market conditions and by looking at past market trends, the Texas Real Estate Research Center‘s (TRERC) research team has made some educated guesses for 2023.
A few known risks in the near term may impact this forecast, and exactly how these scenarios play out will shift TRERC’s expectations. The direction and intensity of the following national and international factors will have a large influence on the Texas economy:
China’s zero-COVID policy and responses to ongoing public protests, which are hampering the global economy. Russia’s war against Ukraine, which has disrupted the global grain and energy markets, increasing instability across the globe. Europe’s energy situation (related to Russia’s war), which is especially dire and could worsen depending on the severity of winter. The outcome of the Federal Reserve’s attempts to control inflation through higher interest rates.
With that in mind, here is TRERC’s forecast for 2023, given current conditions.
General Economy Inflation will likely stay elevated through 2023. The Federal Reserve continues raising interest rates to attempt to rein in inflation. Even if successful, that success will not likely be reflected immediately and completely. If a recession occurs, consumer prices would fall faster than otherwise due to a lack of consumer demand related to a loss in consumer income. Inflation could be pushed higher if supply constraints from China and Europe increase or if volatile energy prices are higher than expected. Employment growth will moderate. Employment has increased over the last 18 months because of the recovery from