Energy prices, value of the dollar, and U.S. economic growth are the three main drivers contributing to Houston’s economic growth, according to Patrick Jankowski, Vice President of Research, Greater Houston Partnership. Jankowski outlined details of Houston’s economy during his presentation at the January meeting of Houston’s CCIM chapter.
Oil prices are currently at $75 per barrel, which makes shale more affordable and doesn’t put a drain on the U.S. economy, Jankowski said. He attributes strong oil prices and the Eagleford Shale as having brought Houston out of recovery sooner than other parts of the country, and he notes a direct correlation between oil and natural gas rig counts and Houston employment. Hiring trends in the energy field was a major factor in the employment growth rate in 2011 and 2012. Energy remains important but it will not drive growth in the next couple years the same way it did in those previous years.
The value of the dollar has not changed much since January 2010, he said. A weak dollar translates into making Houston’s exports more affordable, explaining that 20% of Houston’s economy is tied to global trade. Jankowski noted Houston’s top 25 export destinations as being primarily in Latin America, with only several countries in Europe. “Eighty percent of the countries we deal with are going to show growth, meaning foreign trade will continue to support Houston’s growth in 2013,” Jankowski predicted.
“Strong GDP growth translates into healthy demand for Houston’s key products and services – energy, chemicals, plastics, industrial equipment, engineering and health care,” Jankowski quoted from a recent GHP publication. A recent National Association for Business Economics Consensus Forecast said U.S. GDP growth would reach 3.0% by Fourth Quarter 2013, providing Houston a boost late in the year.
Jankowski also provided a regional forecast for 2013:
• 76,000 net new jobs
• 2.8% annual job growth rate, which is above the long-term average from an historical perspective.
Looking back at history, Jankowski reported that from January 2003 through January 2014, the Houston metro area will have created 500,000 jobs. This level of job growth during this time frame is definitely impressive for any area of the country.
The Greater Houston Partnership is member driven and assists in creating prosperity in the region, noting in 2012 the group assisted in 28 new projects, creating 27,333 jobs, with a $2.6 billion capital investment and a $4.3 billion economic impact .