Higher oil prices may have some in the energy industry rejoicing, but there is growing evidence that the local and national economies are faring a little worse in this downturn than expected.
When oil began plummeting last fall, analysts expected the lower gasoline prices to boost consumer spending, while local observers bragged about how the regional economy was no longer dependent on oil and gas. But consumers are not spending their extra cash, and Houston's economy is not as shockproof as many people touted.
The U.S. economy also may have slipped into recession in the first quarter, and that means it won't offset Houston's slowdown as much as anticipated.
None of this should be any surprised.
After the "end" of the Great Recession (scare quotes needed), the rich got richer, and the middle class, as well as the poor, got plenty of nothing. There's been millions of stories written about stagnant wages in the last 3-4 years for anybody not part of the 1 percent. Along with people using more of what income they had to pay down old debt, that means there's not been an explosion of new consumer purchases the past four years. And, that probably has led to a mild second recession.
Texas? Chris goes on to remind that half of Houston's jobs have at least some connection to the energy sector. That number is probably about 30 percent in the Metroplex, 50 percent in Amarillo and Lubbock or more, certainly more in the Permian, and maybe 10 percent in San Antonio with the shale boom.
Well, we know what happened to the shale boom.
Thus, there is STILL surplus oil sloshing around the system. That's part of why oil will likely remain below $100/bbl for a full decade.
Maybe recession is too harsh, but it's likely that stagnation will be the word of the day for at least months, if not a couple of years, ahead.
And, parts of the economy that are growing could help by starting to pay people more.
Otherwise, yes, this shows that "Rick Perry's Texas Miracle" was based in large part on a single-issue economy of oil — along with a second-issue economy of high levels of Hispanic immigration, as much as tea partiers want to try to deny that. I've written about that plenty of times before. Click the "RickPerrysTexasMiracle" label.
On the other hand, we have two counterpoints.
First, housing starts went through the roof in April.
And, per that pull quote from Chris' piece? National first-quarter economic numbers have been undermeasured for decades, for whatever reason.
It's possible the Texas economy is moving into recession. The national one? Probably not.