Energy
A March survey by the Federal Reserve Bank of Dallas found most exploration firms need West Texas Inter-mediate (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.
Manufacturing
Ninety percent of the losses in manufacturing were in durable goods, i.e., items that not easily consumed or that wear out quickly. Two-thirds of those losses can be tied to the energy downturn. Fabricated metal products (i.e., pipes, valves, flanges) and oil field equipment manufacturing have cut a combined 9,600 jobs. Without an increase in drilling activity, the jobs are unlikely to return.
Transportation and Warehousing
Passenger traffic through the Houston Airport System (HAS) traffic has improved. Early in the pandemic, it was down 90 percent. Today, traffic is down only 75 percent.
Though container volume at the Port of Houston is down 4.5 percent, the total weight of those containers is up 3.9 percent. Shippers, to economize, appear to be packing more cargo into each box.
Finance, Insurance, Real Estate, & Rental
Finance has fared well, with employment at banks, broker-ages and insurance agencies now above pre-pandemic levels. Consumers rushing to buy or refinance a home, the opening of dozen or so bank offices and branches, and until recently a hot stock market has helped create finance jobs during the pandemic. This momentum should support additional growth over the coming months.
Commercial real estate has struggled, however. The market recorded negative absorption for office, industrial and retail space in the second quarter. Some tenants have adopted a wait-and-see attitude, wanting to assess the impact of the recession on their business before considering new space. Others are struggling to pay their current rent. Brokers have reported an uptick in inquiries in recent weeks, suggesting demand may improve by Q4/20 or Q1/21. Employment in commercial real estate will remain flat until that happens.
Government
Job losses in the public sector are overstated. Every June and July, the sector drops 20,000 to 25,000 jobs as school districts, community colleges and universities close for the summer. Outside of public education, the government sector appears to have shed about 4,000 jobs. The employment outlook for this sector will depend on how well tax collections hold up as the economy reopens.
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.
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? - 10 July 2020
Wells Fargo Economics & Financial Report / Jul 13, 2020
The ISM non-manufacturing index jumped 11.7 points to 57.1, reflecting the broadening re-opening of the economy.
This Week's State Of The Economy - What Is Ahead? - 20 August 2021
Wells Fargo Economics & Financial Report / Aug 24, 2021
The Wells Fargo Economics team notes in the Commentary that new COVID cases in New Zealand disrupted the Reserve Bank of New Zealand\'s plan to tighten monetary policy this week.
This Week's State Of The Economy - What Is Ahead? - 10 April 2020
Wells Fargo Economics & Financial Report / Apr 11, 2020
The Federal Reserve greatly expanded the collateral that it is willing to buy, further easing pressures in financial markets.
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? - 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? - 02 July 2020
Wells Fargo Economics & Financial Report / Jul 04, 2020
It was a mildly busy week for foreign economic data and events, while global COVID-19 cases continued to rise.
This Week's State Of The Economy - What Is Ahead? - 16 April 2021
Wells Fargo Economics & Financial Report / Apr 17, 2021
Data released this week continue to show that the economic recovery has gained momentum in March. The much anticipated consumer boom has arrived.
This Week's State Of The Economy - What Is Ahead? - 28 February 2020
Wells Fargo Economics & Financial Report / Feb 29, 2020
The COVID-19 coronavirus hammered financial markets this week and rapidly raised the perceived likelihood and magnitude of additional Fed accommodation.
This Week's State Of The Economy - What Is Ahead? - 06 May 2022
Wells Fargo Economics & Financial Report / May 18, 2022
Unlike Yordan Alvarez, no one is expecting the Fed to stand back and admire their handiwork after this weeks 50 basis point increase in the Fed Discount Rate. Similar to Yordan, their effort is more of a single and not a home run.
