H-Town Day: Larry Kellner
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The H-Town Day presentation on the Greater Houston Partnership by Larry Kellner, Chairman of the GHP.
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H-Town Day: Larry Kellner
- 1. Houston Economic Outlook Presented by Larry Kellner Chairman Greater Houston Partnership October 20, 2011
- 2. Four recessions • March ’81 – January ’87 – Oil price crash and local S&L debacle • June ’91 – January ’92 – First Gulf War, oil price spike, consumer pessimism • June ’01 – June ’03 – Dot.com bubble, Y2K, 911 and Enron • December ’08 – January ’10 – Global financial crisis
- 3. Three employment booms • January ’80 – March ’82 + 235,300 net new jobs • July ’96 – December ’98 + 250,600 jobs • January ’05 – October ’08 + 324,000 jobs
- 4. Three employment busts • April ’82 – August ’83 – 163,800 lost jobs • June ’85 – January ’87 – 133,800 lost jobs • December ’08 – January ’10 – 156,800 lost jobs
- 5. Significant job creation 2800 Nonfarm Payroll Employment 2600 Houston Metro Area 2400 Aug `11 2.595 M 2200 2000 Jan `80 1800 1.478 M 1600 1400 Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Source: Texas Workforce Commission GREATER HOUSTON PARTNERSHIP Houston.org
- 6. Significant population growth as well Metro Area Population (millions) 5.946 4.715 3.854 3.147 ’80 ’90 ’00 ’10 Source: U.S. Census Bureau
- 7. After 30 years • The region has • Added 2.8 million residents • Created 1.0 million Jobs • Built 760,000 single family homes • Sold more than 6.7 million vehicles
- 8. After 30 years • The region has • Built 75 million square feet of office space • Handled 4.7 billion tons of cargo • Served more than 1 billion air passengers A fairly decent performance by most standards
- 9. Onset of the recession Chicago Washington Baltimore San Diego Riverside San Francisco Boston May May Apr Mar Nov Nov Aug Aug Dec Dec Sep Sep Apr Feb Oct Oct Jun Jun Jan Jan Jul Jul ’07 ’08 ’09 Miami Philadelphia Atlanta Dallas U.S. New York Houston Los Angeles Seattle Minneapolis St. Louis Detroit - May ’00 Tampa – Sep’06 Source: U.S. Bureau of Labor Statistics
- 10. Houston Jobs Lost in Recession Metro Houston Employment Unadjusted Seasonally Adjusted Recession Began Jan ’09 Sep ’08 Jobs Lost 152,800 121,200 % Lost 5.8% 4.6% Source: Texas Workforce Commission
- 11. Total jobs lost Listed by Population Size Metro Area Jobs Lost* Metro Area Jobs Lost * New York -389,600 Detroit -480,900 Los Angeles -549,300 Phoenix -246,900 Chicago -340,800 San Francisco -169,300 Dallas -155,900 Riverside -172,500 Philadelphia -144,700 Seattle -141,500 Houston -121,200 Minneapolis -115,900 Miami -245,900 San Diego -101,600 Atlanta -224,800 St. Louis -83,900 Washington -95,800 Tampa -138,900 Boston -104,600 Baltimore -70,400 * Seasonally adjusted Source: U.S. Bureau of Labor Statistics
- 12. Depth of Recession -3.2% -4.3% -4.5% -4.6% -5.1% -5.2% -5.3% -6.1% -6.4% -7.5% -7.7% -8.0% -8.3% -9.1% -9.7% -10.2% -11.1% % Jobs Lost During Recession Largest U.S. Metro Areas* -12.8% -13.5% * Excludes Detroit Source: U.S. Bureau of Labor Statistics
- 13. Length of Recession San Francisco Minneapolis Philadelphia Los Angeles San Diego Baltimore New York Riverside Houston St. Louis Phoenix Chicago Atlanta Seattle Boston Tampa Miami Dallas DC -16 -16 -21 -24 -24 -24 -23 -22 -22 -22 -30 Months from Peak Employment -33 -32 -31 -35 To Employment Uptick -38 -38 -37 Largest U.S. Metro Areas* * Excludes Detroit -42 Source: U.S. Bureau of Labor Statistics
- 14. Jobs recovered through Aug ’11 Metro Houston Employment Unadjusted Seasonally Adjusted Recovery Began Jan ’10 Dec ’09 Jobs Recovered 120,100 110,100 % Recovered 76.6% 90.8% Source: Texas Workforce Commission
- 15. Houston Recovery Halfway Point 120,100 Jobs, 76.6% 32,700 Jobs Unadjusted 23.4% 110,100 Jobs, 90.8% 11,100 Jobs Adjusted 9.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Jobs Recouped Jobs Still Needed to Reach Previous Peak Source: Texas Employment Commission
- 16. Percent of jobs recovered though Aug ’11 Houston vs. Top 10 Metros Houston 90.8% Boston 66.1% Dallas 52.0% DC 46.0% Miami 13.9% New York 11.6% Chicago 10.0% Los Angeles 5.4% Philadelphia 4.1% Source: U.S. Bureau of Labor Statistics Atlanta -1.2%
- 17. Percent of jobs recovered through Aug ’11 Houston vs. Second 10 Metros Houston 90.8% Baltimore 32.1% St. Louis 31.5% Seattle 26.6% San Diego 25.6% Minneapolis 25.2% Tampa 14.1% Phoenix 13.6% San Francisco 11.4% Detroit 5.5% Riverside -0.3% Source: U.S. Bureau of Labor Statistics
- 18. Houston MSA job recovery through Aug ’11 Personal Services +100% Health Care +100% Hotels & Food Srvcs +100% Education Services +100% Administrative Support +100% Wholesale Trade 79.2% Oil & Gas 74.8% Arts, Entertainment 63.8% Manufacturing 48.8% Retail Trade 48.6% Professional Services 43.8% Construction 34.7% Finance 34.0% Real Estate 23.0% Midway Point TWU* 11.7% Information 0.0% * Transportation, Warehousing and Utilities Source: Texas Workforce Commission
- 19. Population Growth • Growing population – 125,000 people/year • Infant population – 65,000 births/year • In-Migration – 60,000 newcomers/year • Aging population – 15,000 seniors (65+)/year Source: U.S. Census Bureau
- 20. Purchasing Managers Index 70 Sep `11 65 60.8 60 Neutral = 50 55 50 45 PMI above 50 signals continued expansion 40 35 30 1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12 Source: National Association of Purchasing Management - Houston, Inc.
- 21. North American Rig Count (monthly average) 2,300 Sep `11 2,100 1,978 1,900 1,700 1,500 1,300 1,100 900 Jun `09 700 895 500 1/05 1/06 1/07 1/08 1/09 1/10 1/11 1/12 Source: Baker Hughes
- 22. Foreign trade $ Value, Billions, Houston-Galveston Customs District 200 $176.1 175 150 $137.1 125 $98.8 100 $76.9 Imports 75 Exports 50 $77.3 25 $60.2 0 YTD Aug '10 YTD Aug '11 Source: U.S. Census Bureau
- 23. Total Appraised Value in Billions Major Texas Counties $323.2 $187.4 $132.5 $113.7 $106.6 $37.2 $23.3 Harris Dallas Tarrant Travis Bexar El Paso Nueces (Houston) (Dallas) ( Ft. Worth) (Austin) (San Antonio) (El Paso) (Corpus Christi) Source: Comptroller of Public Accounts- Property Tax Assessment Division, 2011
- 24. Population & Employment Projections Houston-Sugar Land-Baytown MSA 2010-2035 (Millions) 9.355 8.573 7.842 7.160 6.526 5.938 3.974 3.496 3.727 3.255 3.006 2.688 '10 '15 '20 '25 '30 '35 Population Employment Source: The Perryman Group, Spring/Summer 2011
- 25. 2010-2011 Economic Development GHP Contributions Year Total Jobs Capital Investment 2010 22,989 $455 million 2011 YTD 15,428 $536 million Thus far in 2011, GHP has been involved in 21 announced projects in the region. * Calculations using regional input-output modeling system (RIMSII) developed by the U.S. Bureau of Economic Analysis
- 26. Employment • Compound annual growth rate • 1.89 percent = 47,800 jobs • 2.65 percent = 67,100 jobs • Forecasters growth rates • 66,000 jobs (Perryman) • 53,300 jobs (Woods & Poole)
- 27. Employment • Compound annual growth rate • 1.89 percent = 47,800 jobs • 2.65 percent = 67,100 jobs • Forecasters growth rates • 66,000 jobs (Perryman) • 53,300 jobs (Woods & Poole) • Most recent TWC release • 65,600 jobs since Aug ’10
- 28. Houston Economic Outlook Presented by Larry Kellner Chairman Greater Houston Partnership October 20, 2011
Editor's Notes
- Unadjusted = raw data, does not take into account seasonal bumps and dips that occur same time every yearRetail employment up November December, down in in January and February.Seasonal patterns in construction, arts and entertainment, hotels and restaurants, and education.“seasonally adjusted” a more accurate pictureWhy show unadjusted data at all?Unadjusted data only data available at the industry levelTo understand what’s happening in each industry must work with the unadjusted.
- Where are we in the jobs recovery?Whether looking at adjusted or unadjusted data, Houston is well on the road to recovery.Have been adding jobs to the local economy for over a year and a half.Job growth in Houston actually stronger now than at the start of the recovery.
- Another way to visualize the recovery.Blue shows progress to date.Red shows how far we have left to go.Remember Little League and school fundraisers? There was always a barometer of progress outside the principal’s office. The bars above can be seen in the same light. They show how far we have to go to reach our goal, the goal being returning to previous employment peak.The takeaway from the graph is that Houston is well past the halfway point in its recovery. In fact, we’re past three-fourths of the way.Some time this year we should be out of recovery mode and into expansion mode.
- The take away from this chart is that Houston is further along in the recovery than all the nation’s top metro areas. This is top 10 by total population.Note that the top three metros include two in Texas—Houston and Dallas. Should be no surprise that the Washington, D.C. metro bounced back the quickest.Boston did well because it is a major academic center.New York, Chicago and Atlanta have actually skipped a bit in recent months.
- These are metros ranked 11 through 20 in population.Underscores how well Houston is performing compared to the rest of the nation.
- The job recovery has been uneven. Some sectors are doing exceptionally well. Personal services, health care, accommodations and food services, education services and administrative support employ more now than they did prior to the recession. Wholesale trade benefits from increased exports. Oil and gas exploration and production has recouped all its jobs while oilfield services still lags. Most of the growth in manufacturing is in industrial machinery and industrial equipment. Retail trade is recovering but would benefit from stronger consumer confidence. It’s puzzling why professional services (law, accounting, engineering, marketing, advertising, consulting) isn’t showing stronger growth. The growth in construction comes from heavy/plant construction and not from homes and office buildings. Finance continues to restructure delaying any jobs recovery in this sector. Likewise with real estate. The decline in information (radio, tv, newspapers, magazines, telecommunications) is part of a 10-year U.S. trend. Growth in trucking, air and pipelines is offsetting declines elsewhere in the transportation sector. Construction and real estate remain drags on Houston’s recovery. Were just not building anything, at least not at rate we did prior to the recession. And there are a lot fewer people out there buying houses.
- As long as the population grows, the demand for health care, retail, arts, entertainment will continue to grow.The two times in one’s life when we consume the most health care services—at birth and in old age. Both populations are growing in Houston.In-migration – people moving into Houston from outside the region – drives household formation and the demand for housing.
- The Houston Purchasing Managers Index (PMI) is a short-term indicator for regional productionThe PMI rose to 61.3 in August, up from 58.3 in July.The August ’11 PMI is also higher than the August '10 reading of 52.5.The PMI has a possible range from zero to 100. Readings above the neutral point of 50 indicate likely growth in production over the next three to four months; readings below 50 suggest contraction.The Houston PMI has been above 50 for 24 consecutive months.The Houston PMI is based on eight components: sales, production, employment, pur-chases, prices paid, lead times, purchased inventory, and finished goods inventory. From July to August, seven categories reported improvement, while finished goods inventory remained unchanged.
- A rising rig count is good for Houston’s economy.The University of Houston’s IRF estimates that half of all jobs in the economic base—those sectors that export goods and services outside the region—are tied to the energy industry. The rig count has been rising steadily for more than two years and there is no hints it will decline in the near future.
- Why is foreign trade important?3,000+ int’l companies500+ Houston companies with operations in 160 countries600+ Houston companies with foreign parents94 consulates22 foreign banks62 of the 100 largest foreign corporations34 countries with $1+ billion in trade16 commodities with $1+ billion in tradeOil, industrial equipment, computers, chemicals, plastics, rubber, iron and steel products, copper products, motor vehicles, scientific instruments, beverages, grainsOver one in five residents foreign-bornOn pace to have second-best year on record.
- 2011 Company NameAmerigroup Insurance(Healthcare) Atlas Copco(Manufacturing)Celanese Chemicals(Chemicals)Emerson Electric Co.(Manufacturing)Genan(Tire Recycling)Group 1 Automotive(Headquarters)Lakeside Steel(Headquarters)Lonza(Biotechnology)Mahindra USA, Inc.(Manufacturing)Merit Medical(Biotechnology)NA Industries(Energy)Neutex(Manufacturing)PolyOne(Plastics)Thomas & Betts Corp.(Manufacturing)Toshiba(Energy)TPC Group(Energy)