The Houston ReportBayou Business Download: 2020 Economic Outlook with Patrick Jankowski
Published Jan 21, 2020 by A.J. Mistretta
Bayou Business Download is a podcast from the Greater Houston Partnership that dives into the data and analytics influencing the region’s economy and the core business sectors that drive Houston’s growth.
On this edition of Bayou Business Download, we chat with Partnership Senior Vice President of Research Patrick Jankowski about the state of Houston’s economy going into 2020. What’s happened in the last year and what does that suggest about where we’re going in the months ahead?
Here are 5 key takeaways from Jankowski:
- Those parts of the Houston economy tied to the broader U.S. economy are doing well. We’re seeing U.S. GDP growth of 2.1%. Industrial production was growing in November and the national unemployment rate is at an all-time low. Additionally, those parts of our economy tied to the global economy are also doing quite well. Though trade is flat in the region, it’s flat in the middle of an ongoing trade war with China and a decline in trade with Mexico. So, we’re maintaining. But where we’re seeing a struggle is on the energy side where we’re not seeing growth in revenues or employment. That decline is being driven by the capital markets; Wall Street is less willing to lend money for exploration programs than it was this time last year.
- Houston is in no danger of entering a recession in 2020 or 2021. But we are going to see slower growth because the energy industry is becoming a drag on the economy. There are certain parts of Houston’s economy that will do quite well in 2020, strong growth in housing and apartment construction for instance. But we won’t see significant growth in manufacturing and the consumer side of things is a mixed bag.
- We expect job growth of 42,300 jobs in the region. That’s lower than the long-term average, and again that’s due to the drag of the energy sector. But still if we add 42,000 or 43,000 jobs in the next year, that’s decent growth. (See Employment Forecast)
- One of the big concerns about a slowing China is that that’s where much of the growth in the world economy has been focused. If we see the Chinese economy continue to slow, that’s going to start affecting demand for the things Houston produces, from oilfield equipment and services to the petroleum products themselves. That said, what we’re hoping to see is an increase in growth from India which could help offset the slowing growth in China.
- The world consumes about 100 million barrels of oil a day. Even with the slowing demand for crude, we’re going to need to supply at least 100 million barrels of oil a day for the next 10 to 20 years. So while we have an energy transition to manage, that transition won’t occur quite as rapidly as people might think.
Listen to this and future episodes of the Bayou Business Download podcast here. Get updates on key economic indicators and other data and analysis from the Partnership Research team here.
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