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Economy at a Glance - Sept. 2020

In our September edition, we'll review the past six months since the start of the COVID-19 pandemic on our economy.
Published on 9/10/20

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. Below is an excerpt from the report.

Six Months In

September marks half a year since COVID-19 arrived in Houston. In the early stages, the pandemic cost Houston more than 365,000 jobs. Only about 110,000 have been recouped to date. 

In a normal year, Houston might create 60,000 to 70,000 jobs, in a boom year, a little over 100,000. A boom is unlikely, however, given the current state of the energy industry. And no one knows what “normal” will look like in a post-COVID world. A full recovery may take several years.

Some industries are already well on the way to recovery. These tend to be sectors where the need for social distancing doesn’t interfere with their ability to conduct business. Sectors which require face-to-face interaction, how-ever, continue to struggle and will be among the last to re-gain all jobs lost in the pandemic. This issue of Glance looks at each sector, examines the damage from the March-April shutdown, and explores how swiftly they may recover.

 Energy struggled prior to the pandemic. Crude topped $70 per barrel in October ’18 then began to drift downward. The U.S. rig count peaked at 1,083 in December of ’18. Energy employment plateaued at 238,880 jobs in June of ’19. And drillers sank 16 percent fewer wells last year than in ’18.

Energy’s future doesn’t look bright. Global oil demand won’t return to pre-pandemic levels until ’22, according to separate forecasts by the International Energy Agency (IEA), the U.S. Energy Information Administration (EIA) and the Organization of Petroleum Exporting Countries (OPEC).

A March survey by the Federal Reserve Bank of Dallas found most exploration firms need West Texas Intermediate (WTI) at $49 per barrel or higher to profitably drill a well. EIA doesn’t forecast WTI to reach that level until late in ’21. And Rystad Energy doesn’t see drilling activity returning to last year’s level for at least five years. Additional layoffs are expected as the industry adapts to weak demand and soft prices.

To continue reading this section of Houston: Economy at a Glance, please click the PDF link at the top of the page.

A False Assumption

The energy job losses layered on top of the pandemic losses have not made Houston worse off than other metros. In fact, Houston is faring better than many of its peers. 

Houston is the nation’s fifth most populous metro. One might assume Houston would rank fifth or higher in jobs lost due to COVID shutdowns and the energy crunch. Houston actually ranks tenth among its peers, with fewer layoffs than less populous metros like Boston, Detroit, Miami, Philadelphia and San Francisco.

 Metro Houston has also recouped enough jobs to place it closer to its pre-pandemic peak than most of its peers. Houston ranks eighth out of 20 in that regard.

Why is energy not a bigger drag? For one, going into the pandemic oil and gas jobs employment was already at its lowest level in 15 years. Second, sectors like finance and insurance, professional services, and health care have held up well, helping to mitigate the job losses in energy. The question for Houston and the other metros will be what jobs do come back when COVID is finally behind us? 

Paycheck Protection Program

The Houston region has received more than $9.4 billion in Paycheck Protection Program (PPP) Loan funding supporting more than 700,000 local jobs, according to an analysis of U.S. Treasury Department data by the Greater Houston Partnership. Restaurants, architecture and engineering firms, and building equipment contractors topped the list of recipients.

Over half the loans were made to firms in the city of Houston (8,441), with spring a distance second (706), and Sugar Land third (466). Three-fourths of the loans (10,627) were made to firms in Harris County, with Fort Bend second (1,176) and Montgomery County third (1,098).

The analysis excluded loans of less than $150,000, which represents approximately 25 percent of the value of all loans made in metro Houston. The U.S. Treasury does not disclose data on loans below that level to the public. 

September Takeaways

Here are the facts to know about Houston's economy this month
September Key Takeaway #1
The pandemic cost Houston more than 365,000 jobs. Only about 110,000 have been recouped to date.
September Key Takeaway #2
Pandemic losses have not made Houston worse off than other metros.
September Key Takeaway #3
The Houston region has received more than $9.4 billion in Paycheck Protection Program (PPP) Loan funding supporting more than 700,000 local jobs.

Want to learn more? Contact our Research Team:

Patrick Jankowski, CERP
Senior Vice President, Research
Elizabeth Balderrama
Manager, Research

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