Houston Economic Update | July 2011
Last month the economic recovery turned two. The National Bureau of Economic Research, the organization that officially dates U.S. business cycles, determined that the recession ended in June ’09. The recovery has been weak, though. The broadest measure of economic activity, gross domestic product, has passed its previous peak, but many sectors — employment, housing, auto sales, and industrial production, to name a few—remain well below pre-recession levels. Houston continues to outperform the nation but faces challenges of its own.
The Local Economy
BEA estimates that Houston’s real gross regional product (GRP), the metro equivalent of real national GDP, peaked at $342.8 billion in ’06, fell 1.8 percent to $336.7 billion in ’07, but rebounded to $336.7 billion in ’08. Real GDP stood at $344.7 billion in ’09, 0.6 percent above the previous peak.
BEA provides almost no industry-level detail for Houston’s GRP. However, based on the rebound in energy prices, the climbing North American rig count, and strong earnings reports from the oil field service companies suggest that much of Houston’s economic growth has occurred in the energy industry and the sectors that service it. Though health care reform remains a concern, employment in that industry has grown nearly 11 percent since the recession began. Two factors feed that growth—an aging population and a growing population. Both stimulate demand for more health care services.
Seasonally adjusted payroll employment in the 10-county Houston metro area peaked at 2.616 million jobs in August ’08, fell to 2.495 million jobs in December ’09, and stood at 2.584 million this May, according to estimates by the Texas Workforce Commission. Houston has recouped 89,100, or 73.5 percent, of the 121,200 jobs it lost in the recession.
Growth in private sector employment has been particularly strong. During the past 12 months, the private sector created 52,300 jobs— its strongest performance since August ’08, the month before the recession hit Houston. Since the beginning of the recovery, the private sector has created 96,000 jobs.
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