Houston Update - November 24, 2009

"Houston Continues to Move Towards Stabilization"

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Are the local and national economies on track for a recovery?

Progress towards recovery is, in general, on pace to match the IRF’s forecast provided at November’s symposium, but there has recently been both better than expected news and along with news that is less encouraging. The national and local employment picture is improving somewhat faster than expected, but there remain signs that the financial difficulties of the nation are still not over. Mortgage and credit delinquencies remain at their highs and commercial real estate woes are mounting, but the greatest stress in the credit markets in 2010 may be the problems facing hosts of state and municipal governments over the next 2 years in balancing their budgets and meeting their debt obligations. While the federal government fiscal stimuli will remain in 2010, the extraordinary monetary stimuli will begin to disappear as early as the 1st quarter of this year. Together, this reinforces our opinion that the road to recovery for 2010 will prove to be a very bumpy one with plenty of opportunities for detours... Full Story>>

Dr. Smith's commentaries from November 20, 2004 through the present are now available in Adobe Acrobat format. Click here to download the file.

• Economic Indicators
• Employment
• Price Data
• Excerpts from Fall 2008 Economic Forecast Symposium
• Selected Local Economic Indicators from DATABook Houston
• The Length and Extent of Recessions

• Mexico GDP down 6.8 percent in 2009 01/30/2010
• India RBI begins tightening cycle, ups banks' reserve ratio 01/29/2010
• Euro-zone unemployment hits 10% 01/29/2010
• Argentina's Central Bank president resigns 01/29/2010
• Between the lines, Greek rescue plan seen developing 01/29/2010
• Greece, others, move to quash rumors about bailout 01/29/2010
• Japan economic data mixed; deflationary pressure rises 01/28/2010
• Britain Limps Out of Recession 01/27/2010
• S&P Issues a Warning on Japan's Credit Rating 01/27/2010
• IMF: Global economy recovering but stimulus needed 01/27/2010
• Germany's joblessness falls, unexpectedly, for sixth month 01/05/2010
• U.S. slaps levy on Chinese pipes 12/30/2009
• Chinese premier strikes defiant yuan tone 12/27/2009

• Regulators shut down banks in 5 states 01/30/2010
• Consumer sentiment hits two-year high 01/29/2010
• Durable goods orders rise 0.3% in December 01/28/2010
• New home sales fall 7.6 pct in December 01/28/2010
• Poised for recovery, economy is lurching forward 01/27/2010
• CBO: Federal deficit projected at $1.35T 01/27/2010
• Home prices rise for 6th straight month in Nov. 01/27/2010
• Rise in jobless claims signals bump in recovery 01/21/2010
• Horizon Bank is the first to fail in 2010 01/09/2010
  Unemployment-claims data signal job gains are near 01/06/2010
• Homebuyers sign 16% fewer contracts in November 01/05/2010
• Factory orders jump 1.1% in November 01/05/2010
• Jobless claims fall unexpectedly as layoffs ease 12/31/2009
• November new home sales sink 11 percent 12/23/2009
• Borrowers with modified loans falling into trouble 12/21/2009
• World stocks drop as dollar hits 3-month euro high 12/17/2009
• Unemployment Rates by County
• Consumer borrowing falls for 9th straight month 12/07/2009
• U.S. factory orders rise unexpectedly in October 12/04/2009
• November unemployment is a year-end gift for the U.S. labor market 12/04/2009
• Fed survey finds recovery gaining momentum 12/02/2009
• Commercial real estate loans gone bad imperil banks 12/02/2009

Houston Area:

• Job gains improve the economic mood 01/23/2010
• Dallas Fed - Houston Economic Update
• Greater Houston Partnership Facts and Figures
• NAM PMI Press Release for December

More Links>>>

Monthly Recap:

Monthly Recap - End of December, 2009

While there continues to be growing evidence that the hoped for economic recovery is becoming more of a reality, the news continues to be mixed. Internationally, the global recovery is limited. Countries such as Germany appear to be well on their way to a true recovery path, and much of the Pacific rim nations from New Zealand and Australia to Singapore and China continue to show surprising strength. Yet, other nations are struggling, perhaps even more than they were just a couple of quarters ago. Much of eastern Europe and countries like Ireland and Iceland are on the brink of a depression led financial collapse. Thus, while some of Europe is doing much better, the overall performance of the EU is not particularly encouraging. Furthermore, the myth that somehow China will lead the world out of this recession is way off base. First of all, the Chinese economy and trade imbalance has been a drag on other economies for some time. Second, China is on the verge of its own significant real estate market correction, which is likely to take some of the luster away from the darling of the world's economies.

For the U.S., the most encouraging sign has been the gradual decline in initial claims for unemployment and the reduction in net job losses. Furthermore, the manufacturing sector appears to be experiencing modest growth with production starting to rise and orders increasing. Still the U.S. economy is not totally over the financial crisis of the past 2 years. Mortgage delinquencies remain excessively high; home sales have recently been surprisingly weak, despite the continuation of the “first time homebuyers” program; and woes in the commercial real estate market are steadily mounting. The IRF expects that bank closures will continue to plague the U.S. economy, adding more stress to the federal budget because of FDIC financial limitations; that the recent improvements in home prices will be short lived as mortgage interest rates start to rise; and that the stock market, which has already incorporated all of the good news into prices, will began to look more carefully now to the economic realities of a slow recovery.

To some extent Houston will follow the nation's lead. There will not be a reliable recovery in Houston until the U.S. recovery itself becomes more assured. Right now higher oil prices are helping a portion of the Houston economy, but without similar strength in natural gas prices and without true economic growth nationally, Houston too will be stuck in a very slow growth mode for much of this year. An important key to the local economic recovery here will be a slowdown in residential foreclosures and a moderation in commercial real estate market difficulties. But, this will not happen soon and may take much of the rest of this year to show any encouraging signs at all.

News Flash - February 4, 2009

Initial Unemployment Claims Continue to Climb

Initial claims for jobless benefits rose unexpectedly last week to a seasonally adjusted 480,000. This should further quash hopes that the labor market is poised to recover any time soon. The four-week moving average of initial claims also rose for the third straight week to 468,750, the highest level in two months. After falling significantly in December, layoffs have been steadily rising again and are now far above the 400,000 level commonly thought required to connote a stabilized job market and even further above the 375,000 level most economists consider necessary for actual job growth.

These recent figures come just a day before the Labor Department is scheduled to report the January employment figures and suggest that more job losses are likely to be reported and that the unemployment rate will once again rise. However, since the Labor Department total U.S. employment statistics are based upon early January surveys, the recent bad news might not get reflected in their monthly report until February. Still, all eyes will be on this Friday’s report and fingers will be crossed.

> Read Prior News Flashes.