Houston remains the fastest growing major national urban area with a current growth rate still above 2.5%. This is more than 2 percentage points above the nation’s year-over-year growth rate and about a quarter percentage point above the Texas average. Nonetheless, Houston’s economy is slowing down as the national doldrums spread throughout many sectors of the local economy. Growth in Houston’s energy independent base has declined from a year-over-year rate of 4.0% in June 2007 to a meager 1.4% as of April of this year. However, even growth in Houston’s energy sectors has diminished, falling from a rate of 8.2% in December, 2006 to its present level of 5.1%. High energy prices and a growing domestic rig count should slow down any further declines in employment growth, at least through the rest of this year. The IRF still expects job growth to average 2.6% in 2008, while the national economy will struggle to produce any growth at all. Prospects for a prolonged period of national stagnation, however, will reduce local job growth further. Employment growth in 2009 is expected to fall to 2.3% and population growth is expected to decline to 2.7%. At this point, all eyes should be on energy prices and energy policy. Perhaps the greatest risk to Houston’s energy cushion is misguided federal energy policy shifts within the next 12 months. [See DataBook Houston for more details and commentary]
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