IRF Director Plans to Tell Fall Symposium that Energy Boom is Down While Overall Economic Forecast is Promising
Energy has been the driver of the Houston economy for the last decade, cushioning it from the recession and giving it a resiliency that is uncommon among America’s major metropolitan regions.
But according to Robert W. “Bill” Gilmer, director of the Institute for Regional Forecasting (IRF) at the University of Houston’s C. T. Bauer College of Business, Houston’s energy industry is slowing down.
“That energy surge is increasingly behind us now,” Gilmer said in a preview of the presentation he plans to give at the IRF’s Nov. 14 fall symposium. “The good news is that the U.S. economy is finally ready to step up.”
“The whole economic backdrop in Houston in recent years has been strong energy, a weak U.S. economy and cheap money. Now we are talking about a little weaker energy, much stronger U.S. growth and rising interest rates. So the Houston economy will move into a different world over the next year.”
—Robert W. “Bill” Gilmer, director of the Institute for Regional Forecasting (IRF)
While the U.S. Congress’ failure to timely pass a budget led to a 16-day partial government shutdown sparking fears of a default on the nation’s debt, Gilmer remains optimistic about the big picture as he prepares for his presentation, “A New Economic Backdrop for Houston in 2014.”
The way he sees it, “the three big holes” left by the financial crisis — consumer debt, decrease in state and local revenues and the slow housing market — are almost fully mended.
“Consumers have largely worked their way out of their debt situation,” Gilmer said. “As that happens, state and local governments, through some recent cost-cutting, have put themselves in a much better position, and now they are really beginning to see the revenues roll back in with rising sales and property-tax revenue.”
American economists are “quite optimistic,” Gilmer said, that 2014 will signal the end of the aftermath of the financial crisis in the country and the return of historical trend growth rates of about three percent per year.
At the same time, “the period of really cheap money is going to be behind us,” he said of the anticipated rise in long- and short-term interest rates.
“The whole economic backdrop in Houston in recent years has been strong energy, a weak U.S. economy and cheap money,” he said. “Now we are talking about a little weaker energy, much stronger U.S. growth and rising interest rates. So the Houston economy will move into a different world over the next year.”
A former senior economist and vice president of the Federal Reserve Bank of Dallas, Gilmer holds an M.A. and a Ph.D. in economics from the University of Texas at Austin. As IRF director, he is charged with leading the institute’s twice-a-year symposia on the state of the regional economy.
Registration is now open for the fall symposium, which runs from 11:30 a.m. to 1:30 p.m. at the Hyatt Regency Hotel, 1200 Louisiana St. Tickets are $110 per seat, or $925 for a table of 10. Tickets on the day of the event, if available, will be $125.
By Wendell Brock