“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.
This Week's State Of The Economy - What Is Ahead? - 26 April 2024
Wells Fargo Economics & Financial Report / Apr 29, 2024
We got our first look at Q1 GDP, which downshifted to a 1.6% annualized pace and was accompanied by a hot core PCE deflator reading.
This Week's State Of The Economy - What Is Ahead? - 24 February 2023
Wells Fargo Economics & Financial Report / Feb 28, 2023
Existing home sales declined 0.7% in January, while new home sales leaped 7.2%. Real personal spending shot higher in January, and solid growth in discretionary spending suggests continued consumer resilience.
This Week's State Of The Economy - What Is Ahead? - 12 May 2023
Wells Fargo Economics & Financial Report / May 17, 2023
In April, the CPI rose 0.4% on both a headline and core basis, keeping the core running at a 5.1% three-month annualized rate. However, details pointed to price growth easing ahead.
This Week's State Of The Economy - What Is Ahead? - 22 May 2020
Wells Fargo Economics & Financial Report / May 25, 2020
The re-opening of the country is getting underway, with all 50 states starting to roll back restrictions.
This Week's State Of The Economy - What Is Ahead? - 28 October 2022
Wells Fargo Economics & Financial Report / Oct 31, 2022
Headline GDP continues to send mixed signals on the direction of the U.S. economy. During Q3, real GDP rose at a 2.6% annualized rate, ending the recent string of quarterly declines in growth registered in the first half of 2022.
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.
This Week's State Of The Economy - What Is Ahead? - 10 November 2020
Wells Fargo Economics & Financial Report / Nov 17, 2020
The U.S. election has come and gone, but we have not made any meaningful changes to our economic outlook, which continues to look for further expansion in the U.S. economy in coming quarters.
This Week's State Of The Economy - What Is Ahead? - 07 October 2022
Wells Fargo Economics & Financial Report / Oct 10, 2022
higher interest rates and inflation appear to be weighing on manufacturing and construction, yet service sector activity remains fairly resilient.
This Week's State Of The Economy - What Is Ahead? - 22 January 2021
Wells Fargo Economics & Financial Report / Jan 23, 2021
Housing starts jumped 5.8% during December. Single-family starts soared 12%, while multifamily starts dropped 13.6%.
This Week's State Of The Economy - What Is Ahead? - 03 May 2024
Wells Fargo Economics & Financial Report / May 10, 2024
The Federal Reserve can afford patience thanks to a resilient labor market. During April, total nonfarm payrolls rose by 175,000 net jobs, continuing a string of solid monthly payroll additions.