Bauer Business Focus

Houston Economy Doing Well But ‘Below Trend’

UH economist Bill Gilmer reveals his bi-annual regional forecast.

Florian Martin/Houston Public Media
"Oil is letting us down again, just a little bit," says Bill Gilmer, director of the University of Houston's Institute for Regional Forecasting.


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Houston's economy is "running well, probably just a little bit below trend," according to Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston's Bauer College of Business.

"Over the last three years, since [the oil downturn] ended at the end of 2016, Houston has added on average about 62,000-63,000 jobs," he said. "And that's almost exactly our average growth rate over the last 40 years."

How the coming year looks for economic growth in the region depends largely on two things, Gilmer said: the oil market and the national economy.

"Oil is letting us down again, just a little bit," he said. "The price of oil has been running about $55 [per barrel] this year."

And then there's a credit squeeze in the oil industry.

"Wall Street has sort of walked away," Gilmer said. "Stock market prices for both producers and services are at the lowest levels – even lower actually – than the 2015 and ’16 oil bust."

And the U.S. economy has slowed, due in part to temporary effects of the Tax Cuts and Jobs Act fading and to the trade war with China, which "probably knocked a couple of tenths of percentage points off of GDP growth in the U.S. right now," Gilmer said.

Should the United States be hit by a recession soon, as some economists predict, Houston will likely suffer a "double blow," Gilmer said.

"In Houston what happens is, yes, we share, almost always share that national downturn," he said. "And the other thing that happens is that when the national economy goes into recession, we tend to see an oil bust as well."

Gilmer said recessions are hard to forecast, which is why he didn't include it in his forecast. He said at some point there will be one, but "I don't know whether it's going to be a tech bust, an oil bust, a financial crisis, [or] death by 1,000 cuts."

Click on the audio above to listen to the interview with Gilmer.

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