July 5, 2017
So far, in 2017, Houston’s Business-Cycle Index has expanded at an average rate of 3.3%, which is close to its historical average. However, according to data released by the Federal Reserve Bank of Dallas, revisions to the end-of-2016 data “suggest that Houston exited 2016 less robustly than initially believed.”
Part of the reason is total wages and salaries paid to employees, combined with total retail sales in Q4 2016, fell to their lowest levels since 2013, on a seasonally adjusted basis. Another issue is oil prices. Prices for West Texas Intermediate crude oil in June 2017 was $46, slightly below the average level that the industry requires to break even on new wells in the Permian Basin.
“In past oil busts, it took about three months for the rig count and about a year for the mining-related job count to bottom out once oil prices began to recover,” Fed analysts noted.
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