Hurricane Harvey temporarily has paralyzed the entire Houston region that accounts for a vital part of the United States economy.
This blow comes just as the Texas city was mounting a comeback from the 2014-16 oil crash.
It has been estimated by Moody’s Analytics that the storm will result in property damage of between $30 billion and $40 billion and nearly $7 billion of lost economic output due to many retailers, hotels and restaurants remaining closed during the week.
Nearly half the overall output should recover within a few months, but it will be close to two years prior to all the damaged property is restored said a chief economist at Moody’s
The region has a big role in the economy of the U.S. Its gross output has been projected for his year at $441 billion which is approximately 2.4% of the country’s overall economy.
However, that does not tell the complete story. It is amongst the top three national hubs for oil refineries and the largest area for chemical production. Houston also has the second largest shipping port and has two of the country’s busiest airports.
The economy has been going through a healing stage, albeit slowly. From December of 2014 through December of 2016, the price of oil erased over 77,000 jobs in the area. Since that time, just 7,000 have been recovered.
In 2016, optimism helped hiring as OPEC announced production cuts in oil, helping push up prices of crude. However, the prices have since leveled off under $50 per barrel amidst the abundant output from U.S. shale and other locations.
The unemployment rate of the area is 5.3% which is below its January peak of 5.7% but far above the national average of 4.3%. Auto sales plunged by 30% during the first three months of 2017.
Yet following flat growth in jobs during 2015 and meager increases for 2016, the area added over 38,000 jobs thus far in 2017, which has outpaced the payroll growth rate for the U.S.
The Houston metro area has a number of headquarters for businesses like Waste Management and Sysco and provides regional bases for United Airlines, AIG and HP. It has also grown into a strong sector for healthcare.
It is expected that the area economy of Houston will grow 1.3% during 2017, versus a pace of 2% that was projected prior to Harvey’s arrival.