Spring 2017 Economic Symposium - Is the Oil Bust Really Over? And What Does It Mean for Houston’s Economic Outlook?
Robert W. Gilmer, Ph.D.
Director, Institute for Regional Forecasting
Below are the highlights from the Spring 2017 Economic Symposium:
1) The Houston economy started growing again in 2016 and early 2017 with rising oil prices, but then fell back in March and April as prices dropped.
- The current rig count has more than doubled from the March 2016 low of 404, local sales tax collections are up, and the Houston Purchasing Managers Index suggests solid growth ahead.
- Houston needs—and anxiously awaits—energy jobs to return and oil prices to be near $65 per barrel.
- In the last two years, given the seriousness of the recent downturn in oil, Houston’s economy has completely surpassed expectations.
2) Houston’s saving grace has been the U.S. economy performing well, and low natural gas prices fueling a construction explosion along the ship channel. The Gulf Coast petrochemical boom will begin to wind down quickly after 2017 and through 2021.
3) Houston job growth remained positive despite the downturn in the local economy. Recent revisions to Houston’s total payroll employment figures align with the reports of no growth or slow growth in Houston since 2014.
- Single-family home sales and pricing are up with the strongest growth in sales activity among the high-end single-family markets, which took the brunt of the oil price slump.
- The multi-family glut portends a grim outlook in 2017, as thousands of new units have continued to be added.
4) The main takeaway for Houston’s office market is that it would benefit most from any recovery of oil-related jobs.