Fall 2019 Symposium

Tuesday, November 19, 2019

"Houston and Recession: Likely or Not? Domestic or Global? And Why Should We Care?"

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

Houston’s economy moved onto a moderate growth path in 2019, adding jobs at a pace near Houston’s average over the last 30 years. We have put the great Fracking Bust of 1914-16 behind us, and the U.S. economy remains a key contributor to local growth. But risks to the economy — some real, some perceived — have grown in recent months. Lower oil prices feed an oil-industry credit crunch, the global economy has weakened, and fears of domestic recession are widespread. Our Fall Symposium will focus on how to judge these risks to Houston as we move into 2020 and beyond.

In July, the U.S. expansion reached 10-years of age and became the longest in American history. The economy is slowing, however, as late-cycle stimulus from the 2017 Tax Cuts and Jobs Act wears off. This combination of the expansion’s age and slowing growth has led many to conclude that recession is in our near future: surveys of economists, Wall Street, and an inverted yield curve all proclaim recession ahead.

But many argue that recessions don’t die of old age, and that slowdown was widely anticipated as early as last year. Surveys aren’t all that meaningful, and the yield curve is flat because the Federal Reserve used its huge balance sheet to deliberately make it that way. Maybe recession risks are not domestic but global, as slower growth spreads out of China and through Asia, and as Europe sees setbacks in Italy, Germany, and Britain. An approaching hard Brexit adds to these concerns.

As this is written, a near-term recession is not our base case for Houston’s economic future. But oil adds another dimension. Even without recession, oil producers have failed to deliver profits in 2019, and stock prices of producers and service companies are below the oil bust levels of 2016. An industrywide credit crunch generates bankruptcies and delistings for producers and services, and the rig count has fallen slowly all year. Should a U.S. recession come, it would drag down oil prices further, and recession brings a double-blow for Houston – first recession, then falling oil prices and a setback to the local oil sector.

Our Fall Symposium should have a lot to talk about by the time November arrives. We will take a hard look at the history of recession in Houston, and how a future recession might affect us. Will it be global or domestic? Oil-based or not? And why should we care?

The fair market value of an individual seat is $75 and the fair market value of a table of 10 seats is $750.