Houston’s economy among world’s largest
The Houston that was battered by hurricane Harvey is an economic powerhouse whose influence reaches far beyond its region, leading many to worry about when its economy be able to stand up again.
Houston produces the plastic used in everything from sports cars to baby bottles and is part of a low-lying coastal region that supplies nearly a third of U.S. oilrefining capacity. As the fourthlargest U.S. city, with 2.3 million people, it is also headquarters for 20 Fortune 500 companies.
“There’s nothing being sold, nothing being manufactured and nothing being shipped in a city with a $500-billion economy,” said Patrick Jankowski, an economist with the Greater Houston Partnership, which promotes regional economic development. “Nothing is happening in Houston except rescues and people watching people get rescued.”
“Greater Houston is a major engine of the U.S. economy,” London-based IHS Markit says. Its port is the second-busiest in the United States. Its two airports handle 26 million passengers a year. And its world-class cancer centre processes 13,000 cases a week, many of them booked by patients flying in from abroad.
If it were an independent country, Houston would boast the world’s 23rd-biggest economy, just below Sweden and just above Poland.
Forecasters aren’t yet sure exactly how high the economic damage will go, how far it will spread or how long it will last. The more than 125 centimetres of rain that flooded Houston left much of the city underwater and its manufacturing base immobilized.
Transportation — for residents, employees and businesses — is snarled. Houstonians are trapped in their homes or in shelters, unable to get around because the roads are flooded. The Port of Houston is closed, and flights are still limited at Houston’s George Bush Intercontinental Airport.
Macroeconomic Advisers, a forecasting firm, calculates that economic damage from Harvey could shave between 0.3 and 1.2 percentage points off the nation’s economic growth in the July-September quarter. Before the storm, the economy had been expected to grow at an annual rate of about 3 per cent from July through September.
“The nation is going to find out how important Houston is to the rest of the economy,” Jankowski says “The dashboard in a Ford manufactured in Michigan or the plastic valve made in Indiana or the piece of costume jewelry in Rhode Island or a case for your computer in California — if it has plastic in it, it’s highly likely the plastic originated in Houston.”
Still, analysts note that the economic losses inflicted by Harvey are likely to be recouped once Houston’s rebuilding begins. And some sectors of the area’s economic base may have been less damaged that initially feared.
Robert Gilmer, director of the University of Houston’s Institute for Regional Forecasting, notes, for example, that the area’s refineries and petrochemical plants mostly escaped serious damage and are likely to be running again within weeks. He says authorities shut them down largely out of “abundance of caution . ... You realize that people just can’t get to work or that getting them to work is dangerous.”
The economic blow comes just as Houston was beginning to regain its footing after oil prices had tumbled into a freefall.