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? - 23 July 2021
Wells Fargo Economics & Financial Report / Jul 30, 2021
In the biggest financial news this week not connected to college football conference realignment, July\'s NAHB Housing Market Index slipped one point to 80.
This Week's State Of The Economy - What Is Ahead? - 13 November 2020
Wells Fargo Economics & Financial Report / Nov 14, 2020
The combination of the election outcome and a workable vaccine boosted financial markets and set the background music for this week’s short list of indicators.
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? - 01 May 2020
Wells Fargo Economics & Financial Report / May 04, 2020
U.S. GDP declined at an annualized rate of 4.8% in the first quarter, only a hint of what is to come in the second quarter.
This Week's State Of The Economy - What Is Ahead? - 24 March 2023
Wells Fargo Economics & Financial Report / Mar 29, 2023
The FOMC hiked the federal funds rate by 25 bps on Wednesday amid continued strength in the labor market and elevated inflation.
This Week's State Of The Economy - What Is Ahead? - 24 September 2021
Wells Fargo Economics & Financial Report / Oct 10, 2021
While fears of an Evergrande default in China were rattling financial markets, for those of us in Southeast Texas who have survived the typically very hot months of July, August and September, this week brought the very welcome first early fall-like
This Week's State Of The Economy - What Is Ahead? - 10 June 2022
Wells Fargo Economics & Financial Report / Jun 13, 2022
CPI increases continue to sizzle like this weekend’s temperature, putting consumers in a worse mood than Texas Rangers fans (with their 9.5 games back $500 million middle infield).
This Week's State Of The Economy - What Is Ahead? - 12 April 2024
Wells Fargo Economics & Financial Report / Apr 18, 2024
The March consumer price data dominated the economic discussion this week and are the latest to support that the timing and degree of Fed easing will be later and smaller than many of us previously expected.
This Week's State Of The Economy - What Is Ahead? - 20 December 2019
Wells Fargo Economics & Financial Report / Dec 21, 2019
President Trump became the third president in U.S. history to be impeached by the House, but removal by the Senate is highly unlikely. The House also passed the USMCA, which should be signed into law in early 2020.
This Week's State Of The Economy - What Is Ahead? - 03 February 2023
Wells Fargo Economics & Financial Report / Feb 04, 2023
During January, payrolls jumped by 517K, the unemployment rate fell to 3.4% and average hourly earnings rose by 0.3%. The FOMC raised the fed funds target range by 25 bps to 4.5%-4.75% this week.
