Economy at a Glance – May 2024

Economy at a Glance May 2024

The outlook for global growth continues to improve. In April, the International Monetary Fund (IMF) forecast the world’s economy would grow 3.2 percent in ’24, up from 2.9 percent in its October forecast. The World Trade Organization (WTO) expects merchandise trade to grow 3.3 percent this year, up from 0.8 percent last year. Both forecasts bode well for Houston since the region is closely tied to the global economy. For example:

 

• More than 12,000 Houston-based companies export goods and services to markets overseas.
• The Houston/Galveston Customs District routinely handles more foreign tonnage than any other U.S. customs district.
• Over 1,700 foreign-owned firms have offices, factories, ware¬houses, or service centers in Houston.
• 139 Houston-based firms operate over 3,100 subsidiaries in over 100 foreign countries.
• Over 1.7 million Houston residents, nearly one in every four, were born outside the U.S.
• 17 foreign banks, 39 foreign chambers of commerce and trade associations, and 15 trade and commercial offices promote trade and in¬vestment in the region.
• 88 foreign governments have career or honorary consular offices in Houston.

Now, a closer look at Houston’s global trade ties.

Houston led the nation in exports in ’23, shipping $175.5 billion in goods and commodities abroad. New York ranked second, Chicago third. Houston has ranked as the nation’s top exporting metro in 11 out of the past 12 years. The exception was in ’16 when OPEC flooded the market with crude and oil traded under $50 per barrel most of the year. There wasn’t much demand back then for oil field services and equipment, one of Houston’s major exports.

The data comes from the U.S. Census Bureau’s origin of movement (OM) series, which tracks goods based on the metro from which they began their export journey. For example, a medical device may be manufactured in Houston, then flown to New York where it’s transferred onto a plane destined for Europe. Though the export leaves the U.S. via New York, it began its export journey in Houston. Census considers that as a Houston export.

According to IMPLAN, an economic model the Partnership uses to measure the benefit of relocations, special events, and new programs on the local economy, goods exports supported over 371,000 jobs (direct, indirect and induced) in Houston in ’22, provided over $49 billion in wages, salaries, and other income, and accounted for $136 billion (19.6 percent) of the region’s $698 billion gross domestic product (GDP).

Data on the volume of services (engineering, medical, travel, transportation, etc.) that Houston exports is unavailable. However, the International Trade Administration (ITA) estimates that exports support between 0.3 and 11.2 percent of all service jobs in the U.S., depending on the industry. Applying those percentages to local employment by sector suggests another 130,000 Houston jobs depend on service exports. There’s likely double counting in the IMPLAN and the ITA analysis, but even so, the export of goods and services likely supports over 400,000 jobs in the region.

The Houston/Galveston Customs District set a tonnage record in ’23. The eight ports that comprise the district handled over 404.7 million metric tons of goods and commodities, a 6.4 percent rise over ’21. Those shipments were valued at $360.6 billion, down 6.9 percent from ’23.  The dip in value reflects a drop in crude, chemical, and re-fined product prices from the previous year.

Customs district data differs from the origin of movement (OM) data in that district data reflects what passes through a region, which doesn’t necessarily correspond with where an item was manufactured or produced. However, for Houston, customs district exports align with the region’s industrial base.

In ’23, the Houston/Galveston district exported $1.0  billion or more of aircraft parts, aluminum articles, beer, wines and spirits, cereal grains, crude and refined products, electrical machinery industrial machinery, inorganic chemicals, iron and steel, organic chemicals, pharmaceuticals, plastics, rubber, instruments and measuring devices, and vehicles. The region’s imported many of the same items it imported plus apparel, copper, home furnishings, perfumes and essential oils, toys and games, and wood.

Exports via the Houston/Galveston district consistently exceed imports. They accounted for 66.1 percent of all cargo value handled by the district in ’23. By comparison, exports accounted for 17.9 percent of the Los Angeles district’s exports, 19.7 percent of New York’s, and 28.8 percent of Savannah’s.

The district exported $1.0 billion or more to 41 countries in ’23. Those countries were Argentina, Australia, Bahamas, Belgium, Brazil, Canada, Chile, China, Colombia, Costa Rica, Denmark, Dominican Republic, Ecuador, France, Germany, Guatemala, Honduras, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, Nigeria, Norway, Panama, Peru, Poland, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden, Taiwan, Thai-land, Turkey, U.A.E., and United Kingdom.

Among Houston’s 20 largest trading partners, which account for 75.0 percent of the region’s trade, the IMF forecasts economic growth to accelerate in 11 countries, to hold steady in three, and to dip marginally in six. None of Houston’s major trading partners are expected to slip into recession this year or next.