Spring 2017 Economic Symposium Thursday, May 11, 2017 Hyatt Regency Hotel, 1200 Louisiana Street, Houston, TX 77002 Dr. Robert W. "Bill" Gilmer will present: "Is the Oil Bust Really Over? And What Does It Mean for Houston’s Economic Outlook?" As this is written, Houston’s economic picture could not be more mixed. Rising oil prices in 2016 and early 2017 provided the economy with renewed momentum and growing optimism. The rig count has been rising strongly, local sales tax collections turned up, and the local purchasing managers’ index indicates solid growth ahead. But we are waiting for energy jobs to return, oil prices just fell back under $50 per barrel, and concerns are expressed that U.S. oil producers are again chasing equity gains at the expense of fundamentals. Our Spring Economic Symposium asks if economic expansion is really underway. Or is it just another mirage like the summer of 2015? Houston’s economic problems since 2014 have been about the price of oil. The U.S. economy performed well, providing broad support to Houston’s non-oil businesses. Low natural gas prices stimulated a construction boom along the ship channel. Together, they have staved off any serious economic reversal in the face of the drilling downturn. This year, the chemical construction boom ends, and Houston needs a timely drilling rebound to offset thousands of lost construction jobs. In short, we need oil back at $65 per barrel, and quickly, along with investor confidence that it can stay there. Our local employment forecast to 2021 makes sense of this 2017 economic environment. As usual, residential and commercial real estate are a focus of the Symposium. High-end single-family markets already are anticipating an oil rebound. Apartment developers continue to dig themselves a deeper hole in 2017, as thousands of new units add to the multi-family glut. Houston’s office sector would benefit most from any rebound of oil-related jobs. Finally, we take stock of where we have been in the last two years. Given the severity of the recent downturn in oil, Houston’s economic performance exceeded all expectations. There was serious economic distress and no job growth since 2014, but there was no major downturn. How did that happen? Has a new era of diversification and relative economic stability dawned? Or do Houstonians still need to keep our seat belt fastened as the oil-market roller coaster roars on?
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