Published Dec 09, 2020 by A.J. Mistretta
The Greater Houston Partnership forecasts the Houston metro area will create between 35,000 and 52,000 net new jobs in 2021 as the region works to recover from the devastating economic impact of COVID-19.
The forecast was delivered as part of the annual Houston Region Economic Outlook event held on December 8. Partnership Senior Vice President of Research Patrick Jankowski presented the Houston forecast followed by a conversation with Comerica Bank Senior Economist Robert Dye on the national economic outlook.
Most of the region’s 2021 job growth is likely to occur in the second half of the year as Houston and the rest of the world begin returning to more normal economic activity thanks to COVID-19 vaccines. The sectors contributing most to job growth in this region are likely to be administrative support services, health care and social assistance, manufacturing and professional services. The Partnership expects nearly every industry, except for energy and retail, to post job gains in the year ahead.
A number of factors will determine where Houston job growth lands within the forecasted range, according to Jankowski. If oil prices reach $50 per barrel by the spring, real GDP growth exceeds 4.5% and new COVID infections fall below 40,000 per day in Q1, gains will be on the higher end of the range, he said. If those factors do not fall into place and rising cases force more stay-at-home orders, growth will likely be closer to 35,000 jobs.
Other factors will elevate or weigh on the forecast, including another major U.S. stimulus package, multi-billion-dollar local infrastructure projects and the actions of OPEC, Jankowski said.
“The U.S. will see two different economies next year,” Jankowski said. “The first half of 2021 will be a struggle.” He points to a new potential surge in cases following the holidays and a wait-and-see approach among consumers as the vaccines roll out. Mid-year will be a tipping point, with the general public getting the vaccine and active cases hopefully trending down. “As the pandemic subsides, a wave of pent-up demand will be unleashed. Businesses will restart projects suspended the year before. Consumers, not wanting to forego another vacation, will book flights or load up their SUVs. Energy consumption will grow, oil prices will rise, and drilling activity will pick up.”
Partnership President and CEO Bob Harvey led a fireside chat with Comerica’s Dye delving into the national economic picture. Dye said he’s concerned that the U.S. jobs picture won’t improve quickly, even with the rollout of a vaccine. He said for every 10 workers laid off last spring, companies may hire back six or seven in the months ahead leaving us with a lingering high unemployment rate.
Discussing the energy industry specifically, Dye said the sector has gone through tremendous upheaval with one shock after another. “I think we could get some firming of oil prices over the next year, but nowhere near where prices were,” he said. “We could be operating in this band of $40 to $60 a barrel oil for some time.”
But Dye agrees with Houston’s strategy to use its knowledge and infrastructure to lead the transition to a lower-carbon energy future. “A diverse energy picture is what we need to get to,” he said.
In his remarks, Harvey said that once Houston has overcome COVID, the region will still need time to regain its economic footing. “The virus has dealt this region a significant blow, and the reality is it will take many months – if not years – to regain the jobs lost and repair the damage,” he said. “We have our work cut out for us in growing our economy out of the hole it is currently in. But we are Houston and I believe we will recover. We will continue to work to make this a truly global city, one with a strong, diverse, 21st century economy that provides a great quality of life and opportunity for all.”
See the full 2021 Houston Employment Forecast and the latest metro employment numbers.