Global Recession to Weigh on Houston’s Economy, Jankowski Warns
Patrick Jankowski
HOUSTON – (By Michelle Leigh Smith for Realty News Report) – Global economic turmoil is taking a toll on Houston, according to Patrick Jankowski, Senior Vice President of Research for the Greater Houston Partnership.
Speaking at the Partnership’s annual Global Economic Outlook, Jankowski cited bleak forecasts, including BBC reporting that the world faces its worst recession since the Great Depression. Global GDP contracted sharply, and U.S. GDP fell 4.8 percent in the first quarter, ending the longest expansion in modern history.
The U.S. ranks third globally in job losses. In March and April, Houston lost 330,000 jobs. Between March 15 and May 9, there were 425,000 initial unemployment claims in the region, producing an unemployment rate near 14.2 percent.
Jankowski illustrated the impact with concrete examples: mixed beverage tax receipts plunged from $107,199,928 while the rodeo was still open to just $12,459 in April. Many businesses remain closed under pandemic restrictions, downtown skyscrapers are quiet, and garage transactions fell from roughly 49,000 the week of March 10–17 to fewer than 10,000 per week since. As of this week, only about 20 percent of downtown parking spaces are occupied during the workweek.
New business filings in Harris County, measured by DBAs (doing business as), are down about 75 percent compared with the same period last year. Restaurant reservations in Houston remain roughly 70 percent below pre-COVID levels, and METRO bus ridership in late May was about one-fifth of levels seen in mid-March.
As of May 18, the International Monetary Fund had received relief requests from 100 countries, approving 55 of them. The Asian Development Bank estimated that between 158 million and 242 million full-time payroll jobs could be lost worldwide during the pandemic — a range comparable to the total pre-pandemic payroll employment in the United States.
These global disruptions are likely to weigh on Houston’s export-dependent industries. Jankowski warned that with hundreds of millions out of work worldwide, trade will slow and demand for exports will fall until global growth resumes.
Despite the downturn, Jankowski argued Houston is well positioned to recover because of its deep international connections: 1,700 foreign-owned firms, 17 foreign banks, government offices from 91 countries, and 56 international trade associations and chambers. Houston has 183 trading partners, including 45 countries where bilateral trade exceeds $1 billion. The region’s exports total about $120.7 billion—three times Chicago’s and double Los Angeles’s export volume.
Even before the pandemic, global trade faced headwinds; Forbes and others noted a decline in exports as trade tensions rose. Jankowski pointed out that past investment from international companies such as Total, Linde, Mahindra, Nippon Express, Kaneka, Kuraray, Sasol, Tenaris, Ineos, and Mitsubishi Heavy Industries brought capital, jobs, and valuable international ties that supported growth and tax revenue. Those relationships and future foreign direct investment are at risk until travel and global demand recover.
The oilfield rig count has also fallen dramatically, down to 318 from 1,900 in 2015; the weekly average for the first ten months of 2019 was 972 rigs, slightly below 2018 levels. Recovering travel, hotel bookings, and mortgage applications are early signs of improvement nationwide. Houston currently serves about 851 international flights per week to every continent except Antarctica, ranking fifth in the U.S. for international flights and first among Southern cities. Still, industry leaders predict a slow rebound: Boeing’s CEO estimated the airline industry may take three to five years to recover, with domestic traffic not returning to pre-COVID levels until 2022 and international travel recovering by 2024.
Jankowski summarized his outlook: expect slower overall growth for two to three years, weaker export demand, fewer foreign visitors, and reduced foreign direct investment. Those shifts will change the region’s economic landscape and complicate the recovery of sectors that previously benefited from global investment and face-to-face interactions.
The United States entered a severe recession after the abrupt COVID-19 shutdown. Since lockdowns began, the nation lost around 21.4 million jobs, including 881,000 in March and roughly 20.5 million in April—the largest single-month job loss on record. By early May, over 36.5 million Americans had filed for unemployment benefits, and analysts expected the Bureau of Labor Statistics’ May report to show total job losses exceeding 25 million, or roughly one in six U.S. workers laid off or furloughed.
Job losses have spread across nearly every sector. Hotels, restaurants, bars, health services, and retail were among the hardest hit. The energy sector—exploration, production, and support services—has shed tens of thousands of positions and may see further declines. Of 150 sectors tracked by the Bureau of Labor Statistics, only six registered employment gains, including courier services, computer manufacturing, certain federal government roles, monetary authorities, some information services, and general merchandise stores—offering small bright spots amid the downturn.
