Skip to main content

Research Update: Latest Analysis of COVID-19 Impact on Houston Economy

Published Mar 20, 2020 by Patrick Jankowski

Downtown for Fortune 500

As recently as early March, many economists believed (or perhaps hoped) that if the Federal Reserve cut interest rates and Congress enacted a large fiscal stimulus package, the U.S. could avoid a recession. Two weeks later, interest rates are near zero and Washington is working to inject $1 trillion into the U.S. economy. Unfortunately, that’s all too late. The U.S. is already in a recession, and so is Houston.

Conventional wisdom holds that the U.S. is in a recession when the nation has logged two or more consecutive quarters of declining gross domestic product (GDP). If we stuck with that definition, we’d have to wait until July or October to determine if the U.S. were in a recession. 

The Business Cycle Dating Committee (yes, there is such an organization) of the National Bureau for Economic Research (NBER) embraces a broader definition. The committee looks for a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, income, employment, industrial production, and wholesale-retail sales.” The official reports on those metrics have begun to trickle out, but one can surmise from media reports that a “significant decline” is already occurring. No need to wait for a committee of experts to pronounce the U.S. is in a recession. The Partnership recognizes that we’re in one.

But, what do the vast majority of economists say?

Every month, the Wall Street Journal asks a panel of 70 or more prominent economists when they expected the next recession. In January, only 10.8 percent of respondents expected one this year. In February, 58.5 percent expected a recession within the next nine months, with 41.5 percent expecting a recession to start in Q2. Those results were gathered before the coronavirus began shutting down restaurants, bars, sporting events and stores. Given the trajectory of recent events, the April survey will likely show the vast majority of the panel believes the U.S. is in a recession.

How bad will it get in 2020? 

•    Moody’s Analytics sees the U.S. economy contracting 1.6 percent in Q1 and 2.5 percent in Q2 before picking up in the second half of the year and exceeding three percent growth in 2021.
•    J.P. Morgan expects GDP to contract two percent in Q1 and three percent in Q2 before bouncing back in Q3.
•    Goldman Sachs sees the economy flat in Q1, contracting five percent in Q2, then growth exceeding three percent in the second half of the year.
•    Markit expects consumer spending to decline through June and the economy to remain in a slump through the end of the year. GDP will contact 5.4 percent in Q2 and 1.9 percent over Q3 and Q4.  IHS forecasts U.S. GDP to grow only 0.8 percent in ’21.

The Partnership is concerned that all the above forecasts, except for IHS market, may be overly optimistic.  Weak global growth, declines in the energy sector, shattered consumer confidence, and a wave of credit defaults and bankruptcies will weigh on the recovery.

What does this mean for Houston?

Any time the U.S. tumbles into a recession, Houston gets bruised and battered. This time Houston’s injuries will be more than superficial.  As noted in March’s Houston: the Economy at a Glance, Russia and Saudi Arabia are dueling over who will control global oil markets. Houston is caught in the crossfire. The collapse in oil prices (trading near $24 a barrel, less than half February’s level) will force another restructuring of Houston’s energy sector, the second in the past six years. Houstonians should anticipate a new round of layoffs and bankruptcies. These losses will be compounded by those brought on by the U.S. recession. 

Houstonians like to embrace the notion that their metro was among the last to enter the Great Recession and was among the first to exit. That’s not going to be the case this time. All three pillars of Houston’s economy—energy, global trade and the U.S. economy—are tottering. The next 12 to 18 months will likely be very rough for Houston.

Visit the Partnership's COVID-19 Resource page for updates, guidance for employers and more information. And sign up for daily email alerts from the Partnership as the situation develops. 

Related News

Digital Technology

Houston Advances Global Growth Strategy at VivaTech 2025

6/17/25
As Houston continues to expand its role as a global center for innovation and investment, the Greater Houston Partnership and Rice University led a strategic trade mission to Paris, France, to elevate the region’s presence at Viva Technology (VivaTech) 2025, the largest technology and innovation summit in Europe.  With 180,000 international attendees, VivaTech offered direct access to global business leaders, policymakers and investors exploring high-growth markets. Houston’s activation sparked opportunities for potential partnerships and drew attention from notable leaders, including French President Emmanuel Macron and Vanessa Wyche, Acting Administrator of NASA.   “They see Houston as one of the cities of the future, and they’re backing that up with their resources and attention,” stated John Cypher, the Partnership’s Vice President of International Investment and Trade. “We saw a lot of potential for partnerships that could bring more international startups to Houston and connect founders to new European markets.”  Beyond VivaTech, the delegation met with key players in France’s innovation and finance sectors, including Banque Publique d’Investissement France, Mouvement des Entreprises de France, and Station F.   The week-long trade mission also highlighted Houston’s global academic leadership with a guided visit to Rice University’s Global Paris Center, the university’s first international campus. “It’s a remarkable moment where Rice shows the world that we are an entrepreneurial-, science- and engineering-based tech accelerator,” said Caroline Levander, Rice’s Vice President for Global Strategy. The center represents a broader vision to connect Houston’s educational and entrepreneurial resources to Europe’s innovation ecosystem. The mission culminated with a reception at the former embassy of the Republic of Texas, celebrating the enduring ties between Texas and France and reinforcing a shared commitment to innovation and growth.   Houston’s role at VivaTech 2025 highlights the city’s innovation and role as a major hub for foreign direct investment. Strengthening international business ties remains a significant part of our growing economy and a way to spur further investment and advance innovation for our region.   Learn more about Houston’s growing role in the global economy.  
Read More
Economic Development

Report: Houston's Global Strengths Position Region to Navigate Trade Uncertainty

5/1/25
HOUSTON (May 1, 2025)—As evolving trade policies and geopolitical tensions create economic uncertainty in 2025, Houston enters the year with a strong foundation. According to the Greater Houston Partnership’s newly released 2025 Global Houston report, the region led the U.S. in exports last year – shipping $180.9 billion in goods, more than any other metro area. Click to expand   The report, based on 2024 data compiled prior to this year’s policy changes, highlights how Houston’s infrastructure, industrial base and deep global relationships position the region to better navigate trade disruptions.  “As the U.S. seeks fairer trade arrangements, the uncertainty is impacting some long-term investment decisions,” Partnership President and CEO Steve Kean said. “At the same time, we’re seeing increased interest in the Houston metro as a destination for onshoring. Our region enters this period from a position of strength – we’re not only the nation’s top exporting metro, but also a leader in population and GDP growth. Houston is well-positioned to adapt, respond and benefit from global economic shifts.” Notably, the Houston/Galveston Customs District is one of only 10 in the U.S. where exports exceed imports – a reflection of the region’s strong global demand and production capacity. Key Metrics from the Global Houston Report: #1 U.S. Exporting Metro: $180.9B in goods exported in 2024 (3.1% increase from 2023) Record Customs District Tonnage: 432.6M metric tons handled, ranking No. 1 nationally Total Trade Value: $376.3B through Houston/Galveston, ranking No. 4 among U.S. districts Foreign Direct Investment: 81 foreign-owned companies announced plans to relocate, expand or start operations; a 56% increase from 2023 when 52 international projects were announced. (increase is partially due to improved data sourcing) Global Connectivity: 3.1M international passengers traveled through Houston airports (record; a 4.2% increase over the 12.6 million passengers in ’23) 3.4M container units processed at Port Houston (record) Migration-Driven Workforce Growth: Nearly 65% of the region’s 2024 population growth came from international migration Energy Leads in Exports Energy continues to play an outsized role in Houston’s international economy. Oil and refined petroleum products accounted for more than half (52.1%) of all trade value flowing through the Houston/Galveston Customs District in 2024 – totaling $196.1B, with 88% of that volume heading overseas.  According to the U.S. Energy Information Administration (EIA), global oil demand is expected to reach 103.6 million barrels per day in 2025 – a new record, though below earlier projections. At the same time, lower forecasted oil prices and emerging trade barriers could prompt Texas producers to scale back new drilling, potentially reducing export volumes through the Houston/Galveston District. Top 10 Houston Trading Partners in 2024: Netherlands – $31.9B (↑ 23%) | Driven by oil exports amid EU energy diversification China – $30.1B (↓ 7%) | Key supplier of industrial equipment and electronics Mexico – $24.9B (↓ 13%) | Most integrated supply chain partner South Korea – $23.8B (↑ 4%) Germany – $16.9B (↑ 10%) Brazil – $16.8B (↑ 6%) United Kingdom – $15.0B (↑ 6%) Japan – $13.5B (↑ 3%) India – $13.2B (↓ 0.8%) Canada – $11.5B (↑ 22%) About the Report Produced annually by the Greater Houston Partnership’s Research team, the Global Houston Report analyzes the region’s international trade, foreign investment, migration trends and sector strengths. It serves as a key resource for companies navigating an increasingly complex global business landscape. Access the full report, here. CONTACT:           Brina Morales                                                 Sr. Director, Communications     bmorales@houston.org  
Read More

Related Events

Consumer Price Index

Economy Series - June

Join us on Wednesday, June 25 for a virtual session of the Economy Series to explore a timely update on the economic landscape of…

Learn More
Learn More
Executive Partners