Economic outlook for Houston

November 13, 2008 3:39:47 PM PST
The federal government started its new budget with a record deficit in October of $237 billion. That's four times larger than the deficit one year ago, but that's because it includes $115 billion from the financial bailout approved last month. [CHECK THE MARKETS: Get the latest numbers from Wall Street]
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So what does the future hold for our area in terms of jobs and home values? One highly regarded economic expert has crunched the numbers

For months, Houston has been insulated from the worst of the downturn, but in 2009 things may start to change. That includes the safety of your job.

Lower home values and job losses -- that's what people are seeing across the nation and in 2009, that's what we may see right here in Houston.

"Nothing like the bust of the 80s," said University of Houston economics professor Barton Smith. "We are not going to see anything like that."

But Smith's widely anticipated economic forecast does has some sobering news for our area. Smith predicts thousands of Houston area workers will lose their jobs in 2009.

"We are going to lose jobs next year," he said. "It is going to be pretty small. The number of job losses are five tenths of a percent, so we are talking about 15,000 jobs."

While that may be a relatively small number compared to the rest of the nation, the trouble may be prolonged for those newly unemployed. Smith says it could take them six months or longer to find a new job. That's not good news for Dan Roby, who has already been out of work for several months.

"That is a very tough forecast for people trying to make it in life, and I hope good things will come with the new president and all," he said.

Home values are another problem for our area in 2009. Smith believes values will begin to level off and could drop, but not as severely as in other parts of the nation.

"There are at least three dozen cities in the nation in which prices have fallen already 30 percent," said Smith. "If we see prices fall by 5 percent, I will be surprised."

Smith's forecast also calls for an end to the energy industry boom. He says falling oil prices are to blame.

"The energy companies are not going to disappear, but the energy economy is going to turn flat and it has been our source of growth," said Smith. "If it goes flat, non-energy is already flat, then there is not a driver left in the Houston economy."

We asked which industry would be hardest hit and Smith says the job cuts will come from all sectors. He predicts the oil and gas industry will lose jobs, as will the retail sector and the construction industry.

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