HOUSTON — Gone are the lavish lunches with bottles of wine and luxury cars rolling off the lots, but economists say Houston should weather the latest downturn in oil.
The local economy is showing strains entering the second year of the worst oil downturn in decades but it’s not collapsing the same way as previous oil busts, The Houston Chronicle reported. And most economists don’t think it will happen.
A healthy national economy, continued population growth and a surge of construction are buffering the nation’s energy capital from deeper trouble.
Ed Friedman, the director at Moody’s Analytics, described the economic environment as “bad, but it’s not awful.”
Other sectors — petrochemicals, refineries, health care, construction — are helping to offset the losses in energy and energy-related manufacturing.
Medical offices are expanding and downtown Houston has been revitalized with new construction when oil hovered around $100 a barrel. There has also been an estimated $50 billion in investment along the city’s petrochemical corridor.
Still anemic crude prices over the next 12 months and even into 2017 could result in Houston losing as many as 50,000 jobs in manufacturing and oil and gas before the industry recovers. The city, however, is expected to see a net gain in jobs this year that could reach nearly 25,000.
“If you’re living and breathing oil and gas, or something close to it, you’re really, really concerned,” said Ross Harvison, who compiles data on local economy for the Houston affiliate of the Institute for Supply Management (ISM). “If you’re in some other area, you’re doing OK.”
Thousands of additional construction jobs, though temporary and transient, are helping to compensate for losses in energy.
Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston, called it “ironic,” saying that “the piece of this diversification that’s saving us is the other end of the oil industry.”
Information from: Houston Chronicle, http://www.houstonchronicle.com
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