Skip to main content

Research Update: Latest Analysis of COVID-19 Impact on Houston Economy

Published Mar 20, 2020 by Patrick Jankowski

Downtown for Fortune 500

As recently as early March, many economists believed (or perhaps hoped) that if the Federal Reserve cut interest rates and Congress enacted a large fiscal stimulus package, the U.S. could avoid a recession. Two weeks later, interest rates are near zero and Washington is working to inject $1 trillion into the U.S. economy. Unfortunately, that’s all too late. The U.S. is already in a recession, and so is Houston.

Conventional wisdom holds that the U.S. is in a recession when the nation has logged two or more consecutive quarters of declining gross domestic product (GDP). If we stuck with that definition, we’d have to wait until July or October to determine if the U.S. were in a recession. 

The Business Cycle Dating Committee (yes, there is such an organization) of the National Bureau for Economic Research (NBER) embraces a broader definition. The committee looks for a “significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, income, employment, industrial production, and wholesale-retail sales.” The official reports on those metrics have begun to trickle out, but one can surmise from media reports that a “significant decline” is already occurring. No need to wait for a committee of experts to pronounce the U.S. is in a recession. The Partnership recognizes that we’re in one.

But, what do the vast majority of economists say?

Every month, the Wall Street Journal asks a panel of 70 or more prominent economists when they expected the next recession. In January, only 10.8 percent of respondents expected one this year. In February, 58.5 percent expected a recession within the next nine months, with 41.5 percent expecting a recession to start in Q2. Those results were gathered before the coronavirus began shutting down restaurants, bars, sporting events and stores. Given the trajectory of recent events, the April survey will likely show the vast majority of the panel believes the U.S. is in a recession.

How bad will it get in 2020? 

•    Moody’s Analytics sees the U.S. economy contracting 1.6 percent in Q1 and 2.5 percent in Q2 before picking up in the second half of the year and exceeding three percent growth in 2021.
•    J.P. Morgan expects GDP to contract two percent in Q1 and three percent in Q2 before bouncing back in Q3.
•    Goldman Sachs sees the economy flat in Q1, contracting five percent in Q2, then growth exceeding three percent in the second half of the year.
•    Markit expects consumer spending to decline through June and the economy to remain in a slump through the end of the year. GDP will contact 5.4 percent in Q2 and 1.9 percent over Q3 and Q4.  IHS forecasts U.S. GDP to grow only 0.8 percent in ’21.

The Partnership is concerned that all the above forecasts, except for IHS market, may be overly optimistic.  Weak global growth, declines in the energy sector, shattered consumer confidence, and a wave of credit defaults and bankruptcies will weigh on the recovery.

What does this mean for Houston?

Any time the U.S. tumbles into a recession, Houston gets bruised and battered. This time Houston’s injuries will be more than superficial.  As noted in March’s Houston: the Economy at a Glance, Russia and Saudi Arabia are dueling over who will control global oil markets. Houston is caught in the crossfire. The collapse in oil prices (trading near $24 a barrel, less than half February’s level) will force another restructuring of Houston’s energy sector, the second in the past six years. Houstonians should anticipate a new round of layoffs and bankruptcies. These losses will be compounded by those brought on by the U.S. recession. 

Houstonians like to embrace the notion that their metro was among the last to enter the Great Recession and was among the first to exit. That’s not going to be the case this time. All three pillars of Houston’s economy—energy, global trade and the U.S. economy—are tottering. The next 12 to 18 months will likely be very rough for Houston.

Visit the Partnership's COVID-19 Resource page for updates, guidance for employers and more information. And sign up for daily email alerts from the Partnership as the situation develops. 

Related News

Economic Development

Houston Region Asserts Biotech Excellence at BIO International Convention

6/25/25
The Greater Houston Partnership and regional partners showcased Houston’s thriving life sciences and biotechnology ecosystem at the 2025 BIO International Convention in Boston. As the premier annual biotechnology conference in the United States, BIO 2025 drew nearly 20,000 global attendees, offering a powerful platform to highlight the region’s momentum, innovation, and growing opportunities in the sector.    BioHouston, Galveston EDP, Partnership Lake Houston, Pearland EDC, the Sugar Land Office of Economic Development and Tourism and The Woodlands EDP presented the many assets and unique benefits the region offers to biotechnology companies from startup to full-scale, including 8 million square feet of life sciences space, strategic workforce and educational initiatives, as well as an overall favorable approach to incentives and permitting.    "Working alongside the different members of our region and telling the story of the amazing product that Greater Houston has to offer is invigorating," Galveston EDP Executive Director Joshua Owens said. "Being able to showcase our ecosystem to a worldwide audience is an exceptional step toward creating opportunities for the people of Houston."    Recent wins, such as Bionova Scientific's move to The Woodlands and United Therapeutics’ move to Generation Park, serve as testaments to the variety of options for life science businesses in our region. With pronounced capabilities in research and development, manufacturing and innovation, life sciences companies of all kinds can find a welcoming home in the Houston region.    To learn more about our life sciences and biotechnology ecosystem, visit our life sciences page. 
Read More
Digital Technology

Houston Advances Global Growth Strategy at VivaTech 2025

6/17/25
As Houston continues to expand its role as a global center for innovation and investment, the Greater Houston Partnership and Rice University led a strategic trade mission to Paris, France, to elevate the region’s presence at Viva Technology (VivaTech) 2025, the largest technology and innovation summit in Europe.  With 180,000 international attendees, VivaTech offered direct access to global business leaders, policymakers and investors exploring high-growth markets. Houston’s activation sparked opportunities for potential partnerships and drew attention from notable leaders, including French President Emmanuel Macron and Vanessa Wyche, Acting Administrator of NASA.   “They see Houston as one of the cities of the future, and they’re backing that up with their resources and attention,” stated John Cypher, the Partnership’s Vice President of International Investment and Trade. “We saw a lot of potential for partnerships that could bring more international startups to Houston and connect founders to new European markets.”  Beyond VivaTech, the delegation met with key players in France’s innovation and finance sectors, including Banque Publique d’Investissement France, Mouvement des Entreprises de France, and Station F.   The week-long trade mission also highlighted Houston’s global academic leadership with a guided visit to Rice University’s Global Paris Center, the university’s first international campus. “It’s a remarkable moment where Rice shows the world that we are an entrepreneurial-, science- and engineering-based tech accelerator,” said Caroline Levander, Rice’s Vice President for Global Strategy. The center represents a broader vision to connect Houston’s educational and entrepreneurial resources to Europe’s innovation ecosystem. The mission culminated with a reception at the former embassy of the Republic of Texas, celebrating the enduring ties between Texas and France and reinforcing a shared commitment to innovation and growth.   Houston’s role at VivaTech 2025 highlights the city’s innovation and role as a major hub for foreign direct investment. Strengthening international business ties remains a significant part of our growing economy and a way to spur further investment and advance innovation for our region.   Learn more about Houston’s growing role in the global economy.  
Read More

Related Events

Demography

2025 Houston Facts

The Greater Houston Partnership invites you to Houston Facts on Wednesday, August 6 to unveil the highly anticipated 2025 Houston Facts publication and dive deeper into…

Learn More
Learn More
Executive Partners