The Brookings Global MetroMonitor recently ranked Houston as the top economy in the nation, and 40th worldwide. As we head into 2013, there are some macro indicators which point to a slowdown for our economic juggernaut. While a resurgent oil and gas sector has provided a boost to manufacturing and GDP, there are a number of signs which point to some slowdown in 2013. Here are just a few reasons why we should not get our expectations too high in terms of a never-ending party in the Bayou City:
- ISM Manufacturing Decline Continues
- Australia Cutting Rates As Activity Stalls (see China)
- Canada GDP Slowing (See China)
For those who think the U.S. economy is going to grow in 2013, I would suggest a look at ISM data in more detail. ZIRP and other Fed policies which have served to bail out and protect othewise insolvent corporate welfare queens (not to mention hundreds of corporate executives who should be behind bars for a host of financial crimes) are not without moral hazard. That sucking sound you hear is the gasping breath of the real economy looking for a lifeline.
I believe the macro story will catch up with the Houston real estate market in 2013. The pending and closed home sales data appear to be indicating that sales volume will soon post our first negative year-over-year monthly comparison in over a year and a half. Pending home sales are still running higher than a year ago, but one has to remember that a good portion of those pending sales don’t make it to the closing table!
I think a good alternative label for this chart is the diminishing return of QE….