Economists dive into the economic impact of COVID-19, low oil prices on Houston

double teamed

Coronavirus-caused closures have resulted in a nearly 30 percent drop in the county's daily economic output, according to a new report. Getty Images

Houston's economy continues to suffer as a result of the coronavirus-fueled economic slide and the collapse in oil prices. But just how much are these twin crises injuring Bayou City?

Economic data and forecasts present an increasingly grim outlook for Houston.

A new Moody's Analytics analysis commissioned by the Wall Street Journal provides one measurement of the economic damage being inflicted on Houston. The analysis, published April 2, indicates business closures in Harris County — which represents two-thirds of the region's population — have caused a 27 percent drop in the county's daily economic output.

Ed Hirs, an economics lecturer at the University of Houston, says the 27 percent figure is likely lower than the actual number. He thinks it's closer to 50 percent.

"The reason is that we are talking about output — actual work getting done — and not including monetary transfers from the bailout bill or unemployment insurance," Hirs says.

The lingering daily decline undoubtedly will bring down the Houston area's total economic output for 2020. In 2018, the region's economic output (GDP) added up to nearly $478.8 billion. By comparison, the 2018 economic output for the nation of Austria totaled $455.3 billion, according to the World Bank.

Harris County ranks as the third largest county in the U.S., as measured by population. The Moody's Analytics study shows the country's two largest counties — Los Angeles County in California and Cook County in Illinois — have been hit with even bigger decreases in daily economic output. Los Angeles County's loss sits at 35 percent, with Cook County's at 30 percent.

Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, says in a podcast interview published April 2 that it's difficult to accurately gauge how the economic climate is hurting Houston right now. That's because economic data lags present-day economic reality.

"The situation is changing daily," Jankowski says. "There's so many unknowns out there. This is unprecedented."

Economists predict the Houston area's workforce will see massive losses as a result of the coronavirus and energy downturns.

Economist Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston's Bauer College of Business, says a moderate recession could siphon as many as 44,000 jobs from the region's economy by the end of this year. A more dire forecast from The Perryman Group, a Waco-based economic analysis firm, envisions the Houston area losing nearly 256,000 jobs due to the COVID-19 shutdown and racking up $27 billion in coronavirus-related economic losses.

Jankowski anticipates the Houston area tallying job losses of at least 200,000, meaning losses would be less severe than the 1980s energy bust but more severe than the Great Recession.

"If we're still working from home after May, everyone's job is at risk," says Jankowski, adding that this would trigger more furloughs, layoffs, and pay cuts.

Aggravating Houston's situation is the coronavirus clampdown on restaurants and hotels.

According to survey data released March 30 by the Texas Restaurant Association, 2 percent of the state's more than 50,000 restaurants already had closed permanently, and another 32 percent had closed temporarily. An additional 12 percent of Texas restaurants anticipated shutting down within the next 30 days.

If you add the 2 percent of restaurants that have closed to the 12 percent that expect to close, that would equal roughly 7,000 shuttered restaurants.

"Restaurants are in a fight for survival. The statistics from this survey provide a mere snapshot of the extreme economic impact the COVID-19 crisis is having on one of the most important industries in Texas," Emily Williams Knight, president and CEO of the Texas Restaurant Association, says in a release.

In the lodging sector, Texas is projected to lose 44 percent of its jobs, or more than 64,000 positions, according to a mid-March forecast from the American Hotel & Lodging Association. Experts predict some Texas hotels won't survive the coronavirus crisis.

"COVID-19 has been especially devastating for the hotel industry. Every day, more hotels are closing, and more employees are out of a job," Chip Rogers, president and CEO of the hotel association, says in a March 26 release.

While the restaurant and hotel sectors face a shaky future, the energy industry is grappling with the oil war between Russia and Saudi Arabia as well as depressed demand for crude oil and gasoline. Jankowski says gas prices could stay low through mid-2020 or even the end of 2020 as the energy industry copes with a prolonged oil glut.

Relief funds coming from Washington, D.C., will help stabilize the energy sector and other industries, Jankowski says, but will not "juice" the economy and spark growth.

"We're going to need to move beyond the pandemic," he says, "and we're going to need for some consumer confidence and business confidence to come back before we start to see growth returning again."

According to a new study, Houston is among the cities most vulnerable to job loss due to the recession caused by COVID-19. Getty Images

COVID-19 could cost Houston 44,000 jobs by the end of the year, says local economist

hits keep coming

No matter whether the outlook leans more toward optimism or pessimism, Houston stands to lose a head-spinning number of jobs in the grips of a coronavirus-induced recession.

Economist Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston's Bauer College of Business, says a moderate recession could drain as many as 44,000 jobs from the regional economy by the end of 2020. That's out of nearly 3.2 million workers in the Houston metro area.

The job figures might look "much worse" through the second and third quarters of this year, Gilmer says. However, he adds, Houston's job losses should be followed by a "quick recovery" in 2021.

A study published March 27 by personal finance website SmartAsset predicts an even greater impact on employment in Houston.

SmartAsset forecasts 56,469 full-time and part-time jobs in just the city of Houston, or nearly 5 percent of the local workforce, could be lost in a coronavirus recession. In all, more than 282,000 jobs, or 24.6 percent of the city's workforce, could be in jeopardy, according to the study.

John Diamond, director of the Center for Public Finance at Rice University's Baker Institute for Public Policy, says he thinks Smart Asset's job-loss estimate is "decent" but might be too low.

In light of the federal government's extension of social-distancing guidelines to April 30 and perhaps further extensions, Diamond believes Houston will suffer "substantial" job losses in the next two to four months. After the social-distancing rules are relaxed, Diamond expects an employment bounce-back later in the year.

"The recovery could be rapid if business supply chains and networks remain intact," Diamond says, "and if oil prices rebound by the end of the year."

For his part, Ed Hirs, an economics lecturer at the University of Houston, pessimistically envisions about 300,000 people in the Houston metro area will lose their jobs, at least in the short term, due to the coronavirus recession and the recent plunge in oil prices. (By comparison, the Economic Policy Institute projects the entire state of Texas will lose 442,717 private-sector jobs as a result of the coronavirus pandemic.)

"COVID-19 is going to be kind of a catch-all spring cleaning excuse for a lot of the oil and gas companies as they try to reduce their payroll," Hirs says.

For now, though, concerns about the oil war between Russia and Saudi Arabia must "take a back seat" to concerns about COVID-19, he says.

Aside from the energy industry, the escalating economic slump promises to hit several other prominent business sectors in Houston, including hospitality and manufacturing. Hirs thinks a recession could shrink Houston's 2020 economic output by 10 percent.

"This is across the board," he says, "and has the potential to be extraordinarily devastating."

ThinkWhy, a labor analysis firm, believes the impact of the COVID-outbreak on the Houston job market will be more evident in the blow it delivers to international trade than in any boost it provides to the health care sector. "But the pandemic will no doubt have an impact on both," the firm says.

It's already having a tremendous impact on small and midsize businesses in the Houston area. A March 23-28 survey by the Greater Houston Partnership found 34 percent of those businesses already had reduced their headcounts in response to the COVID-19 slowdown. And 55 percent said they're unsure whether they'll wind up carrying out permanent layoffs in the next six months.

"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," economist Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, wrote in an unvarnished economic assessment published March 20. "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."
The rodeo has shut down prematurely due to the rising threat of coronavirus. Photo courtesy of Rodeo Houston

Rodeo Houston shuts down due to coronavirus concerns, city prepares for economic impact

it's canceled

As the coronavirus continues to march across the country, the City of Houston and the Houston Health Department on March 11 ordered the shutdown of this year's Houston Livestock Show and Rodeo. This stems from Houston and Harris County declaring at least a seven-day health emergency in response to a potential community-spread case of the virus in Montgomery County.

The premature halt to this year's rodeo promises to ripple through the Houston economy. The 2019 version created a local economic impact of $227 million, according to a study commissioned by the rodeo. By comparison, Austin's annual music, film, and tech event — SXSW — generated an economic impact of $355.9 million in 2019. On March 6, the City of Austin ordered cancelation of this year's SXSW, set for March 13 to 22.

The Houston Rodeo and Livestock Show joins a rapidly growing list of events around the world that have been canceled or postponed.

Ed Hirs, an economics lecturer at the University of Houston, says it's hard to gauge the economic damage from the rodeo cutback, but he guesses it could range from $50 million to $100 million. Among those who will feel the pain are rodeo vendors, Uber and Lyft drivers, waiters and waitresses, and hotel employees, he says.

"We can't replace the income that the workers have lost," Hirs says.

The loss of rodeo revenue comes at a particularly inopportune time for Houston.

The earlier coronavirus-related cancelation of CERAWeek, the major energy conference, likely will cost the Houston economy millions of dollars. Last year, CERAWeek hosted 5,500 attendees. Cancelation of other local events could inflict even more financial harm.

Meanwhile, the Houston energy sector is coping with a huge drop in oil prices. The Organization of the Petroleum Exporting Countries (OPEC) oil cartel now projects near-zero growth in oil demand this year, according to OilPrice.com.

Hirs says that as early as the end of this week, some energy employers in Houston could begin layoffs. On March 11, Houston-based Occidental Petroleum Corp. hinted at impending layoffs. The oil and gas exploration and production company said it was slashing capital spending for 2020 from a range of $5.2 billion to $5.4 billion to a range of $3.5 billion to $3.7 billion. In addition, Occidental said it would carry out "additional operating and corporate cost reductions."

Occidental's market value has plummeted to $11 billion, triggering speculation that billionaire Warren Buffett might weigh a buyout of the company. In August, Occidental wrapped up its $55 billion purchase of Anadarko Petroleum Corp., based in The Woodlands.

According to the Greater Houston Partnership, the Houston area is home to more than 600 energy exploration and production companies, 1,100 oilfield services companies, and more than 180 pipeline transportation establishments. In all, the energy industry employs more than 237,000 people in the region.

The combination of the oil slump, the coronavirus pandemic, the ongoing trade war, and other economic drawbacks could push Houston closer to a recession, Hirs says.

"We were heading toward a recession anyway," he says of Houston and the entire country. "I think the coronavirus has tipped it over the edge."

For now, the most immediate economic blow comes from the rodeo shutdown.

In a March 11 statement, the rodeo indicates it's "respectfully and dutifully" following the city's order. The rodeo began March 3 at NRG Stadium and was supposed to end March 22. Last February 21 to March 17, rodeo activities attracted more than 2.5 million visitors.

Rodeo officials say they're working on a process for refunding tickets.

Government officials say an apparent case of coronavirus in Montgomery County prompted cancelation of the rodeo. In this case, the person — who reportedly attended a rodeo-sponsored barbecue cook off February 28 — seems to have contracted coronavirus somewhere in the community rather than as a result of international travel.

In a statement, Bob Harvey, president and CEO of the Greater Houston Partnership, says the organization supports the declaration of a health emergency and the subsequent decision to end the rodeo early.

"It is important that we, as a community, take extra precautions and minimize opportunities for exposure as much as possible to slow the growth in the number of coronavirus cases," Harvey says.

Harvey praises the closure of the rodeo as "the right thing to do."

"As Houston's largest annual event, the Rodeo is a point of pride for our region. We regret the impact this necessary step will have on Rodeo exhibitors, guests, and participants," he says. "But the health and safety of our community must come first."

As of March 11, officials reported 14 cases of the COVID-19 coronavirus in the Houston area.

The rodeo says it's "deeply saddened" by the shutdown. However, it adds, "the safety and well-being of our guests and our community is our top priority."

Among the major musical acts whose rodeo performances are now canceled include Lizzo, Dierks Bentley, Keith Urban, Gwen Stefani, Khalid, Chris Stapleton, Brad Paisley, and Luke Bryan.

"We look forward to the 2021 Houston Livestock Show and Rodeo to continue to promote agriculture, education, entertainment, and Western heritage," according to the rodeo's statement.

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Houston researchers develop material to boost AI speed and cut energy use

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A team of researchers at the University of Houston has developed an innovative thin-film material that they believe will make AI devices faster and more energy efficient.

AI data centers consume massive amounts of electricity and use large cooling systems to operate, adding a strain on overall energy consumption.

“AI has made our energy needs explode,” Alamgir Karim, Dow Chair and Welch Foundation Professor at the William A. Brookshire Department of Chemical and Biomolecular Engineering at UH, explained in a news release. “Many AI data centers employ vast cooling systems that consume large amounts of electricity to keep the thousands of servers with integrated circuit chips running optimally at low temperatures to maintain high data processing speed, have shorter response time and extend chip lifetime.”

In a report recently published in ACS Nano, Karim and a team of researchers introduced a specialized two-dimensional thin film dielectric, or electric insulator. The film, which does not store electricity, could be used to replace traditional, heat-generating components in integrated circuit chips, which are essential hardware powering AI.

The thinner film material aims to reduce the significant energy cost and heat produced by the high-performance computing necessary for AI.

Karim and his former doctoral student, Maninderjeet Singh, used Nobel prize-winning organic framework materials to develop the film. Singh, now a postdoctoral researcher at Columbia University, developed the materials during his doctoral training at UH, along with Devin Shaffer, a UH professor of civil engineering, and doctoral student Erin Schroeder.

Their study shows that dielectrics with high permittivity (high-k) store more electrical energy and dissipate more energy as heat than those with low-k materials. Karim focused on low-k materials made from light elements, like carbon, that would allow chips to run cooler and faster.

The team then created new materials with carbon and other light elements, forming covalently bonded sheetlike films with highly porous crystalline structures using a process known as synthetic interfacial polymerization. Then they studied their electronic properties and applications in devices.

According to the report, the film was suitable for high-voltage, high-power devices while maintaining thermal stability at elevated operating temperatures.

“These next-generation materials are expected to boost the performance of AI and conventional electronics devices significantly,” Singh added in the release.

Houston to become 'global leader in brain health' and more innovation news

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Editor's note: The most-read Houston innovation news this month is centered around brain health, from the launch of Project Metis to Rice''s new Amyloid Mechanism and Disease Center. Here are the five most popular InnovationMap stories from December 1-15, 2025:

1. Houston institutions launch Project Metis to position region as global leader in brain health

The Rice Brain Institute, UTMB's Moody Brain Health Institute and Memorial Hermann’s comprehensive neurology care department will lead Project Metis. Photo via Unsplash.

Leaders in Houston's health care and innovation sectors have joined the Center for Houston’s Future to launch an initiative that aims to make the Greater Houston Area "the global leader of brain health." The multi-year Project Metis, named after the Greek goddess of wisdom and deep thought, will be led by the newly formed Rice Brain Institute, The University of Texas Medical Branch's Moody Brain Health Institute and Memorial Hermann’s comprehensive neurology care department. The initiative comes on the heels of Texas voters overwhelmingly approving a ballot measure to launch the $3 billion, state-funded Dementia Prevention and Research Institute of Texas (DPRIT). Continue reading.

2.Rice University researchers unveil new model that could sharpen MRI scans

New findings from a team of Rice University researchers could enhance MRI clarity. Photo via Unsplash.

Researchers at Rice University, in collaboration with Oak Ridge National Laboratory, have developed a new model that could lead to sharper imaging and safer diagnostics using magnetic resonance imaging, or MRI. In a study published in The Journal of Chemical Physics, the team of researchers showed how they used the Fokker-Planck equation to better understand how water molecules respond to contrast agents in a process known as “relaxation.” Continue reading.

3. Rice University launches new center to study roots of Alzheimer’s and Parkinson’s

The new Amyloid Mechanism and Disease Center will serve as the neuroscience branch of Rice’s Brain Institute. Photo via Unsplash.

Rice University has launched its new Amyloid Mechanism and Disease Center, which aims to uncover the molecular origins of Alzheimer’s, Parkinson’s and other amyloid-related diseases. The center will bring together Rice faculty in chemistry, biophysics, cell biology and biochemistry to study how protein aggregates called amyloids form, spread and harm brain cells. It will serve as the neuroscience branch of the Rice Brain Institute, which was also recently established. Continue reading.

4. Baylor center receives $10M NIH grant to continue rare disease research

BCM's Center for Precision Medicine Models has received funding that will allow it to study more complex diseases. Photo via Getty Images

Baylor College of Medicine’s Center for Precision Medicine Models has received a $10 million, five-year grant from the National Institutes of Health that will allow it to continue its work studying rare genetic diseases. The Center for Precision Medicine Models creates customized cell, fly and mouse models that mimic specific genetic variations found in patients, helping scientists to better understand how genetic changes cause disease and explore potential treatments. Continue reading.

5. Luxury transportation startup connects Houston with Austin and San Antonio

Shutto is a new option for Houston commuters. Photo courtesy of Shutto

Houston business and leisure travelers have a luxe new way to hop between Texas cities. Transportation startup Shutto has launched luxury van service connecting San Antonio, Austin, and Houston, offering travelers a comfortable alternative to flying or long-haul rideshare. Continue reading.

Texas falls to bottom of national list for AI-related job openings

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For all the hoopla over AI in the American workforce, Texas’ share of AI-related job openings falls short of every state except Pennsylvania and Florida.

A study by Unit4, a provider of cloud-based enterprise resource planning (ERP) software for businesses, puts Texas at No. 49 among the states with the highest share of AI-focused jobs. Just 9.39 percent of Texas job postings examined by Unit4 mentioned AI.

Behind Texas are No. 49 Pennsylvania (9.24 percent of jobs related to AI) and No. 50 Florida (9.04 percent). One spot ahead of Texas, at No. 47, is California (9.56 percent).

Unit4 notes that Texas’ and Florida’s low rankings show “AI hiring concentration isn’t necessarily tied to population size or GDP.”

“For years, California, Texas, and New York dominated tech hiring, but that’s changing fast. High living costs, remote work culture, and the democratization of AI tools mean smaller states can now compete,” Unit4 spokesperson Mark Baars said in a release.

The No. 1 state is Wyoming, where 20.38 percent of job openings were related to AI. The Cowboy State was followed by Vermont at No. 2 (20.34 percent) and Rhode Island at No. 3 (19.74 percent).

“A company in Wyoming can hire an AI engineer from anywhere, and startups in Vermont can build powerful AI systems without being based in Silicon Valley,” Baars added.

The study analyzed LinkedIn job postings across all 50 states to determine which ones were leading in AI employment. Unit4 came up with percentages by dividing the total number of job postings in a state by the total number of AI-related job postings.

Experts suggest that while states like Texas, California and Florida “have a vast number of total job postings, the sheer volume of non-AI jobs dilutes their AI concentration ratio,” according to Unit4. “Moreover, many major tech firms headquartered in California are outsourcing AI roles to smaller, more affordable markets, creating a redistribution of AI employment opportunities.”

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