Through the third quarter of 2016, earnings for the average Houston worker continued to lag wages for the prior year, about $51 less than what workers earned in the same period in 2015. Texas Workforce Commission numbers also show that Houston added a total of 14,800 jobs for the year, well shy of what many economist were projecting at the start of the year. The truth is that many professional economists are worse than weather forecasters when it comes to the accuracy of their projections. “Blind optimist” might be a better description of many employed in the economics profession.
The weak employment numbers from December and the year-end totals are a primary reason why auto sales in the Houston area were also lower for the year. The latest numbers indicate that new car sales tumbled 9.4 percent year-over-year in December. Total vehicle sales for the year were down 20.7 percent in Houston. To get a better handle on why we continue to see this weakness in the Houston economy, it might help to consider that the leisure and hospitality sector accounted for 12,900 of the 14,800 jobs added in Houston during 2016. The bartenders and waiters “recovery” has been a dominant theme in many parts of the country.
Contrary to many of the pundits who are projecting a rebound in job growth for Houston in 2017, I will go out on a limb and make a guess that these economists are still being overly optimistic. I think it’s wonderful that the Greater Houston Partnership wants to sell the merits of Houston, but I see little substance with their 2017 projection of 29,700 new jobs this year. Even if we were to get close to that level of job growth, I think the wages of Houston workers will continue to stagnate in the current economic environment. You can chalk it up as a consequence of the Federal Reserve’s serial mismanagement of the economy. That will continue to weigh on any potential green shoots in the economy, here in Houston and across the U.S.
This week we also learned that Houston apartment rents continued to decline in December. Apartment rents peaked in Houston back in 2015. The latest figures from Axiometrics show that average apartment rents in Houston fell to $1052 to end the year, down 3.9 percent year-over-year. What is interesting about this dynamic is that you still have some larger players gobbling up multi-family housing developments, looking to cash in on a potential rebound in the Houston economy. My concern is that this sought after rebound is going to be more elusive than many imagine.
Is our bloated healthcare/sickcare system going to add more high-paying jobs this year? Are we going to going to see oil sustain a rebound above $60 per barrel? Is the exponential growth in the national debt going to reverse course in a miraculous economic renaissance? It will be interesting to see what happens, but the odds continue to favor more secular stagnation. Our new president has promised a great many things on the campaign trail. History suggests that the actual results from our newest batch of double-speaking politicians will be less than advertised.
It is telling that the latest media press releases glossed over the fact that there were virtually no jobs added in Houston in December. Economic pundits pointed to the gains achieved for the year, while downplaying the poor quality of the jobs that were added in Texas during 2016. Many economists and sell-side media outlets continue to look toward greener pastures ahead while ignoring how blatantly artificial the last several years of economic “recovery” have been. See this and this as two primary examples.
These are just some things I am thinking about.