September 2020 Economy At A Glance

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Sep 19, 2020

September 2020 Economy At A Glance


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.



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. 



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? - 10 April 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? - 20 May 2022

U.S. retail sales topped expectations in April, while industrial production also grew more rapidly than economists expected. Data on housing starts, home sales and homebuilder sentiment, however, showed tentative signs of cooling.

This Week's State Of The Economy - What Is Ahead? - 06 November 2020

As of this writing, the outcome of the U.S. presidential election is undecided. Joe Biden, however, appears likely to become president based off of his growing lead in several key states.

This Week's State Of The Economy - What Is Ahead? - 17 March 2023

Retail sales declined 0.4% during February, while industrial production was flat (0.0%). Housing starts and permits jumped 9.8% and 13.8%, respectively.

May 2020 Economy at a Glance

The U.S. is in a severe recession caused by the sudden shutdown due to the COVID-19 pandemic. Since the lock down began, the nation has lost 21.4 million jobs.

This Week's State Of The Economy - What Is Ahead? - 28 October 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? - 23 September 2022

The FOMC raised the target range for the fed funds rate by 75 bps for the third consecutive time. The housing market continues to buckle under the pressure of higher mortgage rates.

This Week's State Of The Economy - What Is Ahead? - 10 September 2021

Data from the opening weekend of College Football indicates that we will have to endure another season of Nick Saban deification.

The Regional Breakdown Of A Labor Market In Meltdown

Employment fell in all 50 states and 43 states saw their unemployment rate rise to a record in April. The damage is already hard to fathom-a 28% unemployment rate in Nevada and still another month of job losses ahead.

This Week's State Of The Economy - What Is Ahead? - 21 May 2021

Over the past year, the housing market has become white-hot.


@ tcgcrealestate

Subscribe Now! IT's Free

Stay up to date with all news coming straight in your mailbox.

Copyright © 2023 TC Global Commercial. All rights reserved.