'It's the perfect storm:' Grim outlook for Houston economy
HOUSTON, Texas (KTRK) -- This is not an uplifting story. We're at the beginning of what economists think is a sustained economic downturn. Brand new numbers suggest huge losses on the way and it's already hit small businesses in a big way.
Two weeks ago, things looked grim at Martinis & Manicures, a new business in south Montgomery County. There was little business and few, if any, customers. Now, it's closed for the foreseeable future.
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"We have no income coming in," said owner Chrissy Wolfson. "Having no income means none of our employees are getting paid. It's just been a big trickle effect."
Wolfson has already reached out to her landlord for help and is hoping the federal stimulus will help her pay her 16 employees. She has not laid off any of them yet.
"This is like uncharted territory for everybody," she said. "This is new for everybody. We're just learning more and more about it this week."
She is not alone in her concern, and the outlook is not good. The Greater Houston Partnership estimates the potential job losses are staggering.
Patrick Jankowski is an economist who modeled a forecast that sees a deep, sustained recession. Of the members who responded to a recent survey, four in 10 businesses have enough capital to last only one to four more weeks.
"We're probably going to lose 150,000 to 200,000 jobs in the region before this is all over with," he said. "That's a projection going through April mid May. This is hitting hard on small business. This is really going to shake up that part of the economy over the next four to six weeks. "
Much of that shake up is exacerbated by the low price of oil. An oversupply of product from Saudi Arabia and Russia has tanked the cost per barrel to historic lows.
"The perfect storm came in with COVID-19 hitting and it's serious," said Roye Strawn, an employee in the energy services sector of the business.
Strawn is thankful to be healthy and have a job as he works from his back porch, but conference calls are not easy given the state of things.
"You can hear the panic in everybody's voices," he told ABC13. "We took some pay cuts. Everybody I know took pay cuts."
Jankowski believes this will be worse than the 2008 recession, but not as bad as the oil bust in the 1980s. But there's a big "if."
"If this thing peaks in mid to late April, we should do okay," he said. "We'll start to see some job growth coming back in June and July. If it turns out the end of May, we're all still working from home, this gets to be pretty serious, and I don't see us coming out of it this year. "
The city of Houston already sees it. At Wednesday's council meeting, Mayor Sylvester Turner warned of budget cuts because of lower revenue, not just today, but for months to come.
"We're taking into account that we are going to see a reduction in our sales tax March, April, May, June," he said. "All of that is being factored in."
There is optimism despite this. Wolfson at Martinis and Manicures said her landlord is working with her. She said the best thing people can do, as individuals and business owners, is to be realistic.
"I think you have to ask the questions you may not want to ask and you have to ask for help," she said. "You have to look at all angles for help because, really, I think that's the only way we can get through it."
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