HOUSTON – The Ralph Bivins Project – (Realty News Report).
Ralph Bivins: This is Ralph Bivins with The Ralph Bivins Project. We’re here today with Patrick Jankowski, He’s chief economist with the Greater Houston Partnership and he’s covered the area’s economy and the regional economy in great detail for a number of years. We’re glad to have you here, Patrick.
Patrick Jankowski: Ralph, thank you, I appreciate the opportunity you’ve given me to share some insights with your listeners.
Click Here (Spotify) or Here (YouTube) to Listen to the Entire Podcast
Ralph Bivins: As far as the economy goes, there seems to be one big overall question. There is so much uncertainty with all the pressures and changes, threats and unknowns. How do you describe the current state of the Houston area economy?
Patrick Jankowski: Houston is actually doing quite well, except it’s at a point of transition. We’ve just come off two years of absolutely incredible growth in the city and the region. Last year, we created 145,000 jobs. In 2021, we created 172,000 jobs. These are the two best years on record in Houston. These growth numbers have never been seen before. Granted, some of the growth was related to coming out of the pandemic and the recovery that followed. Everything was alive for absolutely incredible growth. The thing is, we can’t sustain this kind of growth forever, so now we are seeing a bit of a slowdown. But the slowdown is reaching a more normal level. In the last 12 months, drawing in a little of 2022 and a little of 2023, we have created about 124,000 jobs. So, we are seeing a slowdown, but we are not in danger of a recession or going into a collapse.
If you look at most sectors of the Houston economy, with the exception of one or two, they have created jobs during the last 12 months. It’s nice to see oil and gas come up with 4,500 jobs. Manufacturing has created more than 8,000 jobs. Wholesale, retail, the transportation and finance sectors are all creating jobs. The only ones that aren’t are construction and the leisure and hospitality sector. This latter segment includes the restaurants, the bars, the arts, gyms and so forth. The last one throws me a little. It may be misreporting. I’m concerned, though, that the heat has kept a lot of people home this summer. People aren’t going out the way they used to. I know my wife and I don’t want to walk across a parking lot that’s 92 degrees even at 8 o’clock at night. But overall, we’re doing fine.. We should not be losing sleep over the state of the economy.
Ralph Bivins: Oil prices have made a pretty significant increase in the past couple of weeks. Last time I checked, the price was around $90 a barrel. It had been a lot less before that. You’re seeing the impact at the pumps already or will be soon. I know Houston’s economy has diversified, but the city has been known as the energy capital of the world – well, forever. What about the increase in the price of oil? What will this do to South Texas?
Patrick Jankowski: That’s a challenge for us. In Houston, South Texas and Southeast Texas, we want oil prices to be high enough to stimulate some of Houston’s economy, but we don’t want it so high that it damages the US economy. It’s nice to see the rise in oil prices. Since June, we have seen the price of oil increase $20 a barrel.
Since last November, we have seen the rig count steadily decline. We need the rig count to go back up because it supports manufacturing jobs and injects more money into the economy. Maybe we will see a turnaround in the rig count. The last time I looked, we had lost only one rig in that week. But we have had multiple weeks when we lost eight, nine or 10 rigs. Oil and gas doesn’t contribute as much to the Houston economy as it used to, but it does help somewhat.
If I can digress for a moment, I’d like to talk about what has happened in oil and gas in Houston and oil and gas employment. December 2014 was the all-time high for oil and gas employment in Houston with 300,000 employees, in all aspects of the oil and gas business – exploration, equipment manufacturing, engineering, etc. We lost a third of those jobs during the period of fracking in 2015 and 2016. We have recovered 20,000 to 25,000 jobs, which means we are still 80,000 short of where we were at the height of oil and gas employment.
Ralph Bivins: Is this because the amount of work is smaller or are we doing more with fewer people?
Patrick Jankowski: You nailed it right there. We are able to produce more crude with fewer people. We’ll never get back to 300,000 jobs in the oil and gas industry. If you look back at the peak year of production, the end of 2014, the U.S. produced 8.8 million gallons of crude a day. Shave 80,000 jobs from that for Houston and the U.S. is now producing 12.8 million gallons of crude a day. Production has increased 50 percent and we are doing it with one-quarter fewer workers. We understand the jobs better and we understand the techniques better.
There used to be a time when there was such a demand for office space. But no longer from the oil and gas industry. Use of office space is going to have to come from someplace else.
Ralph Bivins: The office vacancy rate is pretty high, 25 percent, more or less. How are we going to fill them?
Patrick Jankowski: I’m afraid to say we’re not going to fill them. I’m afraid we’ll have a significant number of buildings that will never get leased. I’m skeptical of people who say to turn office space into apartments. The infrastructure is just not there. Also, new apartments are being overbuilt.
Patrick Jankowski bio
Patrick Jankowski, the chief economist and senior vice president of research at the Greater Houston Partnership, oversees the department which provides data analysis and forecasting functions. He has worked for the Partnership and its predecessor, the Houston Chamber of Commerce, for 36 years.
Click Here (Spotify) or Here (YouTube) to Listen to the Entire Podcast
Sept. 25, 2023 Realty News Report Copyright 2023
THE RALPH BIVINS PROJECT PODCAST
LISTEN: THE RALPH BIVINS PROJECT podcast with Edward Griffin of Griffin Partners
LISTEN: THE RALPH BIVINS PROJECT podcast with Michael Scheurich of Arch-Con
LISTEN: THE RALPH BIVINS PROJECT podcast with Mark Taylor of CBRE
LISTEN: THE RALPH BIVINS PROJECT podcast with Stephen Meek of StreetLights Residential.
LISTEN: THE RALPH BIVINS PROJECT podcast with Carlos Bujosa of Transwestern
LISTEN: THE RALPH BIVINS PROJECT podcast with Kris Larson of Central Houston Inc.
LISTEN: THE RALPH BIVINS PROJECT podcast with Mike Spears of Lee & Associates Houston
LISTEN: THE RALPH BIVINS PROJECT podcast with Maria Perez of Gensler
LISTEN: THE RALPH BIVINS PROJECT podcast with Bob Parsley of Colliers
LISTEN: THE RALPH BIVINS PROJECT podcast with Patrick Jankowski of the Greater Houston Partnership
Worthy of Note: Houston architect Dean Strombom has retired after 43 years at Gensler. Listen: THE RALPH BIVINS PROJECT podcast with Dean Strombom of Gensler
Image: Realty News Report Copyright 2023