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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7 can't miss Houston business and innovation events for July

where to be

Editor's note: While many Houstonians are flocking to vacation destinations, there are still plenty of opportunities to network and learn at tech and business events for those sticking close to home this month. From an inaugural biotech summit to the 12th edition of a local pitch showcase, here are the Houston business and innovation events you can't miss in July and how to register. Please note: this article might be updated to add more events.

July 10 - Out in Tech Mixer 

Out in Tech Houston provides an inclusive networking space for LGBTQ+ people and allies working in tech. Check out this relaxed, social-mixer event, hosted on the second Thursday of every month.

This event is Thursday, July 10, from 7 to 8:30 p.m. at Second Draught. Register here.

July 14 – Latinas in Tech Coworking Day 

Connect with fellow Latinas in the industry at Sesh Coworking. Network or work alongside peers, board members and community leaders in a shared office environment.

This event is Monday, July 14, from 9-11:30 a.m. at Sesh Coworking. Find more information here.

July 17 – UTMB Innovation VentureX Summit

Attend the inaugural UTMB Innovation VentureX Summit, where innovators, entrepreneurs, researchers and investors will dive into the future of biotech. Expect panel discussions, fireside chats, a technology showcase and networking opportunities.

This event is Thursday, July 17, from 7:30 a.m.-4 p.m. at The University of Texas Medical Branch at Galveston. Find more information here.

July 17 – Open Project Night 

Collaborate on solutions for some of Houston’s most pressing issues at this month’s Open Project Night at Impact Hub Houston. Hear from guest speakers and listen to open mic pitches. July’s theme is Decent Work & Economic Growth.

This event is Thursday, July 17, from 5:30-7:30 p.m at Impact Hub Houston. Register here.

July 24 – NASA Tech Talks

Every fourth Thursday of the month, NASA experts, including longtime engineer Montgomery Goforth, present on technology development challenges NASA’s Johnson Space Center and the larger aerospace community are facing and how they can be leveraged by Houston’s innovation community. Stick around after for drinks and networking at Second Draught.

This event is Thursday, July 24, from 6-7 p.m. at the Ion. Register here.

July 30 – Ion Bike Club

Join Bike Houston at the Ion for a 45-minute guided cruise through the Ion District and Midtown. Afterward, enjoy a complimentary beer and network with like-minded riders at Second Draught.

This event is Wednesday, July 30, from 5:30-7:30 p.m. at the Ion. Register here.

July 31 – Bayou Startup Showcase

Hear pitches from startups and small businesses from Rice University’s OwlSpark and the University of Houston’s RED Labs accelerators at the 12th annual Bayou Startup Showcase. Read more about this year’s teams here.

This event is Thursday, July 31, from 3:30-7 p.m. at the Ion. Register here.

Houston researchers: Here's what it takes to spot a great new idea

houston voices

Having a “promotion focus” really does create a mental lens through which new ideas are more visible.

Key findings:

  • New ideas can be crucially important to businesses, driving innovation and preventing stagnation.
  • Recognizing those ideas, though, isn’t always easy.
  • Nurturing what is known as “promotion focus” can help managers spot fresh ideas.

Whenever the late surgeon Michael DeBakey opened a human chest, he drew on a lifetime of resources: the conviction that heart surgery could and should be vastly improved, the skill to venture beyond medicine’s known horizons and the vision to recognize new ideas in everyone around him, no matter how little formal training they had.

Appreciating new ideas is the heartbeat of business as well as medicine. But innovation is surprisingly hard to recognize. In a pioneering 2017 article, Rice Business Professor Jing Zhou and her colleagues published their findings on the first-ever study of the traits and environments that allow leaders to recognize new ideas.

Recent decades have produced a surge of research looking at how and when employees generate fresh ideas. But almost nothing has been written on another crucial part of workplace creativity: a leader’s ability to appreciate new thinking when she sees it.

Novelty, after all, is what drives company differentiation and competitiveness. Work that springs from new concepts sparks more investigation than work based on worn, already established thought. Companies invest millions to recruit and pay star creatives.

Yet not every leader can spot a fresh idea, and not every workplace brings out that kind of discernment. In four separate studies, Zhou and her coauthors examined exactly what it takes to see a glittering new idea wherever it appears. Their work sets the stage for an entirely new field of future research.

First, though, the team had to define their key terms. “Novelty recognition” is the ability to spot a new idea when someone else presents it. “Promotion focus,” previous research has shown, is a comfort level with new experiences that evokes feelings of adventure and excitement. “Prevention focus” is the opposite trait: the tendency to associate new ideas with danger, and respond to them with caution.

But does having “promotion focus” as opposed to “prevention focus” color the ability to see novelty? To find out, Zhou’s team came up with an ingenious test, artificially inducing these two perspectives through a series of exercises. First, they told 92 undergraduate participants that they would be asked to perform a set of unrelated tasks. Then the subjects guided a fictional mouse through two pencil and paper maze exercises.

While one exercise showed a piece of cheese awaiting the mouse at the end of the maze (the promise of a reward), the other maze depicted a menacing owl nearby (motivation to flee).

Once the participants had traced their way through the mazes with pencils, they were asked to rate the novelty of 33 pictures — nine drawings of space aliens and 24 unrelated images. The students who were prepped to feel an adventurous promotion focus by seeking a reward were much better at spotting the new or different details among these images than the students who’d been cued to have a prevention focus by fleeing a threat.

The conclusion: a promotion focus really does create a mental lens through which new ideas are more visible.

Zhou’s team followed this study with three additional studies, including one that surveyed 44 human resource managers from a variety of companies. For this study, independent coders rated the mission statements of each firm, assessing their cultures as “innovative” or “not innovative.” The HR managers then evaluated a set of written practices — three that had been in use for years, and three new ones that relied on recent technology. The managers from the innovative companies were much better at rating the new HR practices for novelty and creativity. To recognize novelty, in other words, both interior and external environments make a difference.

The implications of the research are groundbreaking. The first ever done on this subject, it opens up a completely new research field with profound questions. Can promotion focus be created? How much of this trait is genetic, and how much based on natural temperament, culture, environment and life experience? Should promotion focus be cultivated in education? If so, what would be the impact? After all, there are important uses for prevention focus, such as corporate security and compliance. Meanwhile, how can workplaces be organized to bring out the best in both kinds of focus?

Leaders eager to put Zhou’s findings to use right away, meanwhile, might look to the real-world model of Michael DeBakey. Practice viewing new ideas as adventures, seek workplaces that actively push innovation and, above all, cultivate the view that every coworker, high or low, is a potential source of glittering new ideas.

---

This article originally appeared on Rice Business Wisdom.

Jing Zhou is the Mary Gibbs Jones Professor of Management and Psychology in Organizational Behavior at the Jones Graduate School of Business of Rice University. Zhou, J., Wang, X., Song, J., & Wu, J. (2017). "Is it new? Personal and contextual influences on perceptions of novelty and creativity." Journal of Applied Psychology, 102(2): 180-202.

5 Houston innovators who made headlines in June 2025

Featured Innovators

Editor's note: Houston innovators were in the spotlight in June, thanks to earning major accolades for their work on national — and global — levels. Here are five Houston innovators to know right now.

Tianshu Zhai, Chen-Yang Lin, Jing Zhang, HEXAspec co-founders 

HEXAspec has been awarded an NSF Partnership for Innovation grant. Photo courtesy of Rice

HEXAspec, a spinout from Rice University's Liu Idea Lab for Innovation and Entrepreneurship, was recently awarded a $500,000 National Science Foundation Partnership for Innovation grant.

Founded by Tianshu Zhai and Chen-Yang Lin, who both participated in the Rice Innovation Fellows program, as well as Jing Zhang, HEXAspec has developed breakthrough inorganic fillers that allow graphic processing units (GPUs) to use less water and electricity and generate less heat. The company will use the funding to continue enhancing semiconductor chips’ thermal conductivity to boost computing power. Learn more.

Cole Woody, University of Houston student

Cole Woody has earned the Barry Goldwater Scholarship for his research on personalized cancer-fighting vaccines. Photo courtesy UH.

Cole Woody, a biology major in the College of Natural Sciences and Mathematics at the University of Houston, has been awarded a Barry Goldwater Scholarship, becoming the first sophomore in UH history to earn the prestigious prize for research in natural sciences, mathematics and engineering.

Woody was recognized for his research on developing potential cancer vaccines through chimeric RNAs. The work specifically investigates how a vaccine can more aggressively target cancers. Learn more.

Varshini Chouthri, developer of NOMAD

NOMAD aims to help hikers stay in the moment while still utilizing technology. Photo courtesy UH.

An AI-powered, screen-free hiking system developed by Varshini Chouthri, a recent industrial design graduate from the University of Houston, has received Red Dot’s “Best of the Best” award, which recognizes the top innovative designs around the world.

“NOMAD was truly a passion project, inspired by years of hiking growing up, where the outdoors became a place of peace, challenge, and reflection,” Chouthri said.Learn more.

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