March 2025 Commerce Club Luncheon Featuring Jesse Thompson, Dallas Federal Reserve, Houston Branch
Outlook 2025: Return to Trend?
Jesse Thompson, senior business economist of the Houston Branch of the Federal Reserve Bank of Dallas offered his 2025 economic outlook through his “Return to Trend?” presentation at the Port Bureau’s March Commerce Club luncheon.
In his overview, Thompson noted that business conditions and optimism deteriorated in February and March. Manufacturing remained soft, and uncertainty was elevated. Investment and new construction were robust, amid well supplied energy markets. The U.S. looks to be on course for trend GDP growth and full employment, but downside risks are rising. Progress toward 2% inflation continues, but tariffs and rising uncertainty cloud the outlook.
The Texas job growth forecast for ’25 has been oscillating around trend (~1.7%), with the current (as of March) forecast at 1.9% growth after revising ’24 data and a strong January ’25. “Slowing to trend” was inevitable and risks are weighted to the downside.
“Two months of data doesn't necessarily make a trend, right? But it is a very noteworthy reversal from where we were at over the better part of the last year,” said Thompson.
He described energy markets as “well-supplied”, stressing their importance in looking ahead for Houston: “The thing that always separates our outlook from the outlook of the rest of the country has been oil and gas.”
Thompson showed multiple charts of data as he discussed the macro backdrop factors that influence the Houston (and Texas) economy, including GDP, wages, international migration, inflation and more. He also discussed industrial construction, noting Texas is “outpacing” the U.S.; oil and gas – U.S. crude output growth is expected to slow further in ’25, with rising oil and gas output flowing through to exports – as well as residential and commercial real estate factors.
Examining the outlook and risks ahead, Thompson identified risks as stemming from geopolitics and domestic policy. His key takeaway thoughts included an erosion in momentum as uncertainty “weighs” on business confidence. Uncertainty is also likely to delay new investment decisions in the commercial, industrial and energy infrastructure sectors. Texas’ 0.8% job growth premium over the U.S. is likely “preserved” in 2025, with Texas growth at nearly 1.9% by yearend.
Thompson closed the presentation with his thanks and a request for input from the port community.
“I want to say we do need your input. We have a number of surveys across the energy sector, manufacturing service sector, and the retail sector, and we comb these comments. Join the survey. Follow us on social media.”
Thank you to our Commerce Club sponsors!
Annual Table sponsors:
Callan Marine • Chevron/Kirby • Enterprise Products Partners • Kinder Morgan • Houston Pilots • Intercontinental Terminals Company • Moran Shipping Agencies, Inc. • Pemex • Targa Resources • TGS Ceder Port Industrial Park • WGMA
March Table sponsors: