Houston’s economy continues to slow despite record energy prices. Year-over-year employment growth is now down to 2.3%. One must go back to 2005 to find growth that slow. Upstream energy continues to boom with employment growth at 6.3%. Clearly, this is the strength of the local economy right now. The non-energy portion of the local economy is currently growing at only 1.2%, year-over-year. That’s the primary drag on regional growth and it won’t get any better until the U.S. economy straightens itself out. The region’s secondary sectors are also slowing down with a current year-over-year growth rate of 2.1%. That is in contrast with a 4.4% rate of growth just a year ago. Look for the slowdown to gradually continue. If the U.S. economy were to fall into an official recession the second half of this year (a real possibility), then Houston’s growth is likely to dip below 2%. If the U.S. economy merely remains in its current stagnant mode, then upstream energy growth should keep the overall regional economy’s growth rate in the low 2% range.
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