While the nation could be heading toward a recession, Houston's strong energy base will help the city escape some of the difficult times, according to four observers of the local economic scene.

As always, Houston's fate depends on energy prices, whether the dollar stays weak — which helps overseas sales — and whether Houston can avoid many of the housing problems that plague the rest of the nation.

As we will each quarter, the Chronicle asked some experts to gaze into the future. This time we spoke with a banker, a chamber of commerce chief, an economist and a researcher.

Q: How will Houston fare with the downturn? Better, worse or about the same as the rest of the nation?

A: Houston should do somewhat better because of the factors that make the city distinct, said J. Downey Bridgwater, chairman, president and CEO of Sterling Bank.

Besides mentioning Houston's role as the energy capital — which is a huge driver of highly desirable jobs — Bridgwater noted several more factors: the Texas Medical Center, which brings in international visitors; NASA, which brings in lucrative government contracts; and the Port of Houston, which is benefiting from the heavy shipping traffic because of the weak dollar.

Houston is almost getting back to the 1980s when it was running countercyclical to the national economy, said Ron Welch, economic data manager at the University of Houston's Institute for Regional Forecasting.

Continued energy dominance is a big plus, said Welch, who also owns Municipal Information Services, a collector of financial data from the 500 local municipal utility districts.

There's one caveat, said Eugenio Alemán, senior economist for Wells Fargo & Co. in Minneapolis who closely watches the Houston economy: the price of oil.

If it plunges into the $40-a-barrel range, something that is very unlikely, Houston will fare worse than the rest of the nation, he said.

If it stays above $50 a barrel, it will do better.

Laura Murillo, president and chief executive of the Houston Hispanic Chamber of Commerce, credits the city's entrepreneurial spirit as a reason Houston will outperform other cities.

People who have money for investment will be looking more at Houston as an international city with a high concentration of Hispanics and a diverse business base, she said.

The employment picture

A: "Right now everyone is very, very nervous," Alemán said.

And the worst thing for investment is uncertainty, he said. When people start to worry, companies become cautious in making decisions such as launching products and creating jobs.

For Houston, job creation will depend in part on how low petroleum prices go, Alemán said. And if demand falls, which only would happen if there's a major downturn in red-hot developing economies, companies won't need as many employees.

Bridgwater said he still expects Houston to keep adding jobs, but not at the rate of either 2006 or 2007.

"Businesses are finding that Houston is a great place to relocate to," he said, citing an attractive business environment and low cost of living.

He expects to see more industries cluster in Houston, such as biotech and medical technology, following the example of energy.

Successful companies want to be near other successful companies, Bridgwater said. And with the Texas Medical Center and the local universities, there's a steady pool of qualified workers in those fields. With the research base in place, he said, the next logical progression is to move to manufacturing and distribution.

Q: There has been talk of giving middle-income taxpayers a tax rebate to stimulate the economy. Do you think Houstonians will spend the money, save it or use it to pay down debts?

A: "I imagine that if it's $600 or less, they'll spend it," said Welch, before last week's preliminary deal between the White House and Congress on a roughly $600-per-taxpayer rebate.

"I can't see them saving it. Six hundred dollars isn't all that exciting."

Welch also speculated that some of the money would go toward paying down debt, but mostly it would go toward household expenses.

He said he would prefer the government provide incentives to encourage saving. That, in turn, would stimulate investing, which would be the best thing for the economy.

Murillo is betting Houstonians will use their newfound gain to pay down mortgages, home equity loans or credit cards.

Alemán figures many folks will repeat their behavior in 2001 when they used their rebate checks to trim debt.

Normally, if consumers believe there will be a recession, they will be very, very careful with their extra money, Alemán said.

If they don't expect one, they will spend, he added.

Q: What sectors of Houston's economy are most likely to be helped and which will most likely be hurt from a nationwide recession?

A: None of the four foresees Houston benefiting from a recession. Rather, Houston's advantages — its strong energy economy, its relatively stable housing market and its demographic mix — will act as a buffer to lessen the severity of a downturn.

Unless the world demand for petroleum plummets, the oil services industry and rig builders have orders lined up until 2010, Welch said.

That, in turn, will help the transportation industry, he said, referring to products like the open fields of pipe that are ready for shipping near Crosby.

But Houston is also a traditional economy in many respects and can't escape some nationwide woes.

A recession will likely depress some business travel and convention attendance, Bridgwater said, which could pinch the hospitality industry.

Big trucks and SUVs

A: In a word, no.

None of the panelists saw that happening anytime soon, if at all.

"We've had high gas prices for some time now, and there has not been much of a change in people's attitudes," Bridgwater said.

If, however, gasoline prices double to $6 a gallon, then Bridgwater said he expects consumers to shift toward more economical cars.

Even then, that wouldn't happen overnight because paying a little more for gas — or opting not to drive as much — is cheaper than investing in a new vehicle.

"While we may not be buying a new Suburban, we'll keep it and use it" if that's what's already parked in the driveway, Murillo said.

There's also the cultural factor.

"I go all over Texas, and people say we are a truck town," Alemán said. "That won't change in the short to medium term."

lm.sixel@chron.com