Patrick Jankowski, SVP Research, Greater Houston Partnership
On March 2, Texas Gov. Greg Abbott issued an executive order fully reopening the state’s businesses and facilities, becoming one of the first states in the US to do so. More than six months later, however, Texas is still lagging behind the rest of the country in the post-pandemic recovery. What’s going on?
Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, a chamber of commerce serving the Houston region, explains:
“The service side of Houston’s economy—professional services, finance, health care, recreation, retail, restaurants, bars—are approaching full recovery. However, the goods producing sectors—energy, manufacturing, construction—continue to struggle. Their woes pre-date the pandemic.
“Houston has suffered from an overbuilt office market since the mid-00s. The capital markets have been closed to the energy sector since 2018, making it more difficult to drill wells. And manufacturing in Houston is closely tied to energy and followed the same path.”
It’s not all bad news, though:
Given that Houston has the most diverse population of any major metro, and that corporations are striving to build more diverse workforces, this trend is expected to continue. The region is expanding as a transportation and logistics hub, with the Port of Houston on pace to handle a record number of containers in 2021. There have been no significant delays or backlogs at the local wharves and docks. And more than 90 million square feet of warehouse and distribution space has been added over the past five years.
In the four quarters ending [with the second quarter of 2021], more than $1.4 billion in venture capital has flowed into local digital startups. According to the Computing Technology Industry Association, Houston has the 11th largest tech workforce in the US. And the Texas Medical Center recently broke ground on TMC3, a world-class, 37-acre campus that will unite the best minds in medicine, science, academia, and commerce to rapidly drive breakthroughs in life science research. These developments are helping to offset weaknesses elsewhere in the economy.
Figure below: Houston lost 361,400 jobs during the pandemic, and the region’s recovery lags that of the US as a whole.