“How much of Houston’s economy is tied to energy?”
“Is Houston less dependent on energy than it was 10, 20 or 30 years ago?”
Energy Defined
Before answering either question, one must first define the industry. Oil and gas has three sectors: upstream, mid-stream, and downstream. Upstream includes exploration, production, and oilfield services. Midstream focuses on the processing, transportation, and storage of crude and natural gas. Downstream involves the refining and processing of oil and natural gas into fuels, chemicals, and plastics. All three sectors are well-represented in Houston.
Energy's Contribution to Houston's GDP
Every December, the Bureau of Economic Analysis (BEA) publishes its estimates of gross domestic product (GDP) for all 384 U.S. metro areas. BEA estimates that oil and gas extraction accounted for $20.5 billion (4.3 percent) of Houston’s GDP in ’18. That’s down from $33.1 billion or 7.7 percent in ’14.
Metro Houston Employment
Metro Houston added 55,000 jobs in June. That’s on top of the 78,200 jobs added in May. Despite the surge, local employment remains 217,700 jobs below its February pre-COVID level. The largest job gains occurred in restaurants and bars, retail and arts, entertainment and recreation. Government, manufacturing and transportation, ware-housing and utilities and energy continued to lose jobs. Of the major sectors, only finance and insurance has returned to its pre-COVID employment level.
SNAPSHOT – KEY ECONOMIC INDICATORS
Crude Oil
The closing spot price for West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, averaged $40.69 per barrel during the last week of July ’20, down 28.0 percent from $56.05 for the same period in ’19. The COVID-19 pandemic continues to reduce global economic activity. However, oil prices rose in July as OPEC and partner countries maintained production cuts and the United States continued to reduce drilling activity.
Home Sales
The Houston area housing market has fully regained its spring losses and returned to pre-COVID sales volumes though the recovery may be short-lived as listings dry up. Houston-area realtors sold 10,975 single-family homes in July ’20, up 23.0 percent from the same month last year and the most ever for a single month in Houston. Year-to-date sales totaled 51,388 single-family homes, up 2.7 percent from the first seven months of ’19.
Natural Gas
The cost of consumer goods and services as measured by the Consumer Price Index for All Urban Consumers (CPI-U) rose 1.0 percent nationwide from July ’19 to July ’20, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the volatile food and energy categories) increased 1.6 percent since July ’19.
Rig Count
Baker Hughes reports 244 drilling rigs were working in the U.S. during the second week of August ’20. That’s down 691 rigs, or 73.9 percent, from the same week in August last year.
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Wells Fargo Economics & Financial Report / Aug 16, 2021
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This Week's State Of The Economy - What Is Ahead? - 17 September 2021
Wells Fargo Economics & Financial Report / Sep 23, 2021
While we were picking up tree limbs from the yard, data released this week generally showed a stronger economy in August than many expected in the wake of surging COVID cases.
This Week's State Of The Economy - What Is Ahead? - 01 March 2024
Wells Fargo Economics & Financial Report / Mar 05, 2024
Economic data were downbeat this week, as downward revisions took some of the shine out of the marquee headline numbers. Despite the somewhat weak start to Q1, economic growth continues to trek along.
This Week's State Of The Economy - What Is Ahead? - 02 December 2022
Wells Fargo Economics & Financial Report / Dec 08, 2022
Total payrolls rose by 263K in November, with the unemployment rate holding steady at 3.7% and average hourly earning rising by 0.6%.
This Week's State Of The Economy - What Is Ahead? - 11 February 2022
Wells Fargo Economics & Financial Report / Feb 14, 2022
Deep thought for the week, if a tree falls in the forest, or an Olympics occurs, and no one is there to hear it or see it, did it really occur?
This Week's State Of The Economy - What Is Ahead? - 08 January 2021
Wells Fargo Economics & Financial Report / Jan 12, 2021
The manufacturing sector is showing a great deal of resilience, with the ISM Manufacturing survey exceeding expectations, at 60.7, and factory orders remaining strong.
25 January 2021 Economic Outlook Report
Wells Fargo Economics & Financial Report / Jan 30, 2021
In the second installment of our series on economic risks in the foreseeable future, we analyze the potential for higher inflation in coming years stemming from excess demand.
This Week's State Of The Economy - What Is Ahead? - 24 June 2022
Wells Fargo Economics & Financial Report / Jun 25, 2022
The biggest economic news was Fed Chair Powell presenting the Federal Reserve\'s semiannual Monetary Policy report to Congress this week.
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Wells Fargo Economics & Financial Report / Oct 21, 2024
Retail sales came in stronger than expected in September, industrial production was weaker than expected and residential construction softened.
This Week's State Of The Economy - What Is Ahead? - 20 September 2024
Wells Fargo Economics & Financial Report / Sep 24, 2024
The economic calendar was packed this week, but one event took center stage. At the conclusion of its September 17-18 meeting, the FOMC announced a 50 bps reduction in the federal funds rate to a target range of 4.75%-5.00% (chart).