Fall 2016 Symposium

Thursday, November 10, 2016

"Waiting on Oil Markets: Houston's Economy Seeks Direction"

Featuring: Robert W. Gilmer, Ph.D.
Director, Institute for Regional Forecasting

The dictionary defines limbo as an uncertain state that you can’t control, and where there is no progress or improvement. Waiting for a meaningful move upward in oil markets, recent months have found Houston’s economy lost in limbo. Oil prices plummeted over the winter, and while they have partly rebounded, they have since vacillated between $40 and $50 per barrel. The rig count has made only small gains from historic lows, as oil prices remain short of what is needed to drive meaningful recovery. The official statistics from the Texas Workforce Commission say we finished 2015 with only 20,700 new jobs, less than one percent growth, and have lost 4,600 so far this year.

The 2016 Fall Economic Symposium will chart where Houston’s economy goes from here. Houston has been badly hurt by the drilling bust since late 2014, with 70,000 jobs lost in oil- and gas-related businesses. But it has been supported by a healthy U.S. economy, and further helped by a $50 billion boom in eastside petrochemical construction. Early in the downturn, the two positives were just enough to offset what has become the worst drilling downturn in U.S. history.

Early revisions of the official employment data by the Federal Reserve Bank of Dallas indicate that Houston may have already slipped into mild recession early in 2016. Even if the preliminary revisions prove wrong, it may be too late to hold off recession ahead, as the petrochemical construction rapidly winds down. As thousands of downstream construction workers are laid off, a strong recovery in drilling must set in soon – a definitive upward turn in oil markets -- to offset these losses.

It is still about oil prices and about the timing of real improvement in oil markets. The Fall Symposium will update progress on oil markets, the US economy, and eastside construction, and pull it together to update the economic outlook for Houston. Also on the agenda are revised prospects for retail, healthcare, single- and multi-family housing, as well as an in-depth look at commercial real estate.