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Friday PM September 11th, 2009`

Financial experts, industry and government officials look at Houston's economy over next 18 months…Federal deficit surges into record territory…Sales tax receipts down 12.5 per cent from same month last year…


Houston’s Notre Dame alumni sponsored the Houston Business Summit at the Federal Reserve Bank on Allen Parkway today, looking at the area economy during the next 18 months. Experts from construction, the automotive industry, real estate, oil and natural gas and government looked at Houston’s chances for a quick recovery from the recession. Harris County Judge Ed Emmett says next year’s budget will be based on this year’s property tax appraisals, and that means belt-tightening could be in the future.


“And if property values go flat — as they have — then our budget goes flat, and that’s something that we have to look at very carefully. And so next March, when we prepare the budget, we’ll be dealing from, you know, the appraisals from the year before, and we’re going to have to make some decisions based not just on that, but on what we think’s going to happen the next year.”

Executive Chairman Alejandro Giannotti with the Mayor’s Office of International Affairs and Development says Houston can learn from other cities.


“When you see other cities such as Beijing or Moscow or Amsterdam — cities that have 15 to 20 million inhabitants — that are facing issues that are daunting in the air quality side, on transportation, on the social-economic issues of growing so fast. And what we see there is some of the steps they are taking and Houston is having very similar issues and we learn on how they are coping, what solutions they are using in the transportation area, in the air quality area. We should learn what the other cities are doing, because in many cases it’s working; in other ones, that are not.”

Dallas Federal Reserve Bank, Houston branch, senior economist Bill Gilmer says higher prices for oil and gas helped Houston weather recessionary factors longer. But he says the drop in commodity prices could hinder Houston’s recovery.

The federal deficit surged higher into record territory in August, hitting $1.38 trillion with one month left in the budget year. The Treasury Department says the deficit last month was $111.4 billion, below the $152 billion that economists expected. Still, the imbalance added to a flood of red ink already accumulated through a severe recession and massive spending needed to stabilize the banking system. The Obama administration last month trimmed its forecast for this year’s deficit to $1.58 trillion, from an earlier $1.84 trillion. The recovery of the banking system led to the reduced estimate as it meant the administration did not need to get an additional $250 billion in bailout support for banks.

Businesses reduced inventories at the wholesale level for a record 11th consecutive month in July, although sales rose by the largest amount in more than a year. Rising sales should help convince businesses to restock, a shift that could boost the manufacturing sector as companies begin to increase orders to U.S. factories. The Commerce Department says wholesale inventories declined 1.4 per cent in July, a bigger decrease than the one per cent drop economists expected. But that decline followed a 2.1 per cent fall in June, which was more than the 1.7 per cent drop originally reported. Sales at the wholesale level rose 0.5 per cent in July, the fourth consecutive increase and the biggest gain since a two per cent jump in June 2008.

Texas Comptroller Susan Combs says the state collected $1.75 billion in sales taxes in August—down 12.5 per cent from August 2009. Local governments will receive $428.3 million in monthly sales tax allocations—a 12.9 per cent decrease compared to the same month a year ago. The state and local sales tax figures represent sales that occurred in July.

General Motors is restoring the white-collar pay cuts made earlier this year. The company cut executive-level pay by ten per cent, manager pay by seven per cent and other salaries by three per cent in the spring as it struggled to avoid bankruptcy protection. The cuts in the U.S., Canada and several other countries saved millions but gm ended up spending 40 days in bankruptcy protection. It emerged on July 10th.

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