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Economy at a Glance

March edition: Insight into the potential impact of the COVID-19 virus and falling oil prices on Houston’s economy
Published on 3/16/20
Economy at a Glance - March '20

This issue of Glance examines the potential impact of the COVID-19 virus and falling oil prices on Houston’s economy.

Houston: The Economy at a Glance is a free monthly publication, which offers the latest data along with expert commentary on the Houston region’s economy.

To subscribe to Glance, please click here.

 

CORONAVIRUS (COVID-19)

As of Sunday, March 15, the day before this newsletter is sent to subscribers, there were 3,774 confirmed cases of the coronavirus (COVID-19) in the U.S. Texas accounted for 77 of those cases, Houston for 30. No local deaths have been reported yet, but as the number of confirmed cases rises it’s only a matter of time before Houston logs its first. With the mortality rate of the disease around 2 percent, the number of deaths will exceed that associated with the seasonal flu, which has a mortality rate around 0.1 percent. [1]

The disease has spread quickly. Chinese officials identified the first case in Wuhan Province on December 1; Houston recorded its first case on March 4. The journey from China to Houston took only 94 days. 

Houstonians have responded quickly to threat, stocking up on canned goods and toilet paper, cancelling public events, and preparing to work from home. Some have likened stockpiling to preparing for a hurricane. The comparison stops there. Meteorologists know when a hurricane will make landfall, the likely intensity when it does, and how long the storm will linger over Houston. COVID-19 has already arrived in Houston, but no one knows how long the outbreak will last nor how severe it will be. Nor can we expect aid to rush in from other states once the virus sub-sides. The entire country, indeed the world, is facing the same pandemic. 

Economic Impact

The Partnership has received numerous inquiries about the impact COVID-19 will have on Houston’s economy. Frankly, it’s too soon to tell. As recently as mid-February the U.S. stock market was setting records and crude was trading near $54 a barrel. Social distancing didn’t start until early March. Almost all the data that is available, both local and national, reflects conditions prior to the outbreak.  

Since March 1, only two reports specific to Houston have been released—the February Purchasing Manager’s Index (PMI) and the February sales report from the Houston Association of Realtors. Each tells a different story.

The Houston PMI fell from 52.4 in January to 50.2 in February, according to the Institute for Supply Management. Readings above 50 indicate the local economy is expanding, below 50 that it’s contracting. February’s reading suggests Houston was on the cusp of a downturn before the outbreak began.

Two subcomponents of the PMI, employment and sales, are signaling than an economic downturn may have already begun. Several respondents indicated in the comments section of the survey that the COVID-19 virus is negatively affecting their business.

 

[1] The mortality rate is the percent of patients who eventually succumb to a disease. A rate of 0.1 percent suggest that for every 100,000 who contract the flu, 100 will die. A rate of 2-3 percent suggests for every 100,000 COVID-19 patients, 2,000 to 3,000 will die.

 

Continue reading this month's Economy at a Glance for more insight into the potential impact of the COVID-19 virus and falling oil prices on Houston’s economy.

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