July 2020 Economic Update from GHP
Wednesday, July 22, 2020
By: AJ Mistretta - Greater Houston Partnership
The U.S. and Houston area economies are showing tepid signs of recovery on some fronts while other indicators continue to struggle as COVID-19 cases rise.
Partnership Senior Vice President of Research Patrick Jankowski provided insight in areas such as jobs, housing and when growth might return in this latest economic update on July 21.
Here are a few takeaways:
- Nationwide, nearly 21 million jobs were lost in March and April. So far, the U.S. has recovered close to 7 million of those jobs, leaving a deficit of about 15 million.
- From January 2014 to the beginning of this year, the nation added roughly 15 million jobs. In other words, we’ve wiped out over six years of job growth during this downturn so far.
- Initial U.S. jobless claims have been trending down, but altogether these total about 51 million initial claims so far. Jankowski said these almost certainly include duplicates, but the disturbing trend is that weekly new claims continue to be above the 1 million mark.
- Job losses appear to be disproportionately affecting African American and Hispanic workers compared with Anglo workers, both nationally and here in Houston.
- Jankowski said industrial utilization, which had fallen dramatically in March and April, has begun to tick back up but not nearly as high as it was pre-pandemic. He said if that continues to improve, it will aid hiring and business investment.
- The U.S. GDP, which had been growing by about 2% per quarter, dropped 5% in Q1 of this year. It’s expected to drop even more when Q2 figures are released. The Congressional Budget Office anticipates the U.S. GDP will end the year down 5.9% compared with 2019. The forecast calls for year-over-year GDP growth of 4.8% in 2021 and 2.2% in 2022.
- Jankowski said he and his staff are tracking almost 200 different companies that have announced layoffs here in the Houston area in recent months.
- Continuing jobless claims in metro Houston totaled nearly 260,000 in June.
- The U.S. rig count continues to fall and currently stands at just 253 active rigs, the lowest level in decades.
- Year-to-date construction starts in the metro area totaled $9.4 billion through May, down from $10.9 billion during the same period in 2019.
- The latest figures from the Houston Airport System shows the city’s two commercial airports are only handling about 10% of their normal passenger traffic for this time of year. Experts anticipate it could take two to three years before travel returns to pre-pandemic levels.
- Year-to-date Houston area single-family home sales totaled 48,303 through June, nearly even with 2019 figures. Low interest rates, pent up demand and fear of missing out are some of the factors Jankowski said are contributing to the resiliency of the housing market.
- On the multifamily front, demand is not keeping pace with product hitting the market prompting landlords to cut rents across classes $14 between March and June. The trend is likely to continue with roughly 21,000 units recently coming online and another 19,000 now under construction. Jankowski said demand simply won’t be there to absorb that amount of product.
- “The virus is going to determine the recovery and the economy won’t fully recover until we have methods of dealing with the virus,” Jankowski said.