The new re-benchmarked Texas Workforce Commission/Bureau of Labor Statistics data reveal that the Houston slowdown, which the IRF has been warning about for the past 6 months, is already here. Job growth that peaked a year and a half ago at nearly a 5 ½ % annual pace has now fallen to only .7%. Growth in all sectors has declined, even upstream energy. Downstream energy, which includes petrochemicals and refining, is experiencing job losses as is the region’s secondary sectors, which include retail, most of banking and finance, and a myriad of other consumer services. Furthermore, while upstream energy employment is still over 5% higher than this time last year, it too is quickly headed for negative territory.
Last year’s regional economic performance stood out dramatically in contrast to the national economy primarily because of strong growth in upstream energy, but that will not happened again in 2009. Furthermore, even last year we had already begun to feel some of the nation’s pain, especially in new home sales and construction. But what will prove the killer in 2009 is lost jobs in upstream energy. Last year, upstream energy was responsible for 70% of the region’s growth, but with world demand for oil falling sharply, the current incentive to drill for new fossil fuel reserves is now next to zero. OPEC will likely be forced this spring to take even more production off the market, and while that might help to stabilize oil prices, it won’t stimulate exploration until the overhang of excess potential supply is absorbed. That will require a turn around, not just in the U.S. economy, but the entire world economy.
In light of the new employment numbers and the worsening environment for energy, the IRF has just released its quarterly forecast update for the Houston region. This now shows that Houston will lose approximately 56,000 jobs over the next 2 years, much less than what was lost during the energy bust of the mid 80s, but the worse we’ve seen since then. Houstonians need to be prepared for this new economic environment and act accordingly. The full forecast along with all of the revised employment numbers for 2008 is available in the IRF’s DataBook Houston, which was just released this week.
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