‘Dominos were falling; now they’re standing back up’ Midland-Odessa economy continues to rebound from deep downturn

Buoyed by a resurgent oil and gas industry, the Midland-Odessa general economy is recovering from the deep downturn prompted by low crude prices Buoyed by a resurgent oil and gas industry, the Midland-Odessa general economy is recovering from the deep downturn prompted by low crude prices Photo: Michael Ciaglo/Houston Chronicle Photo: Michael Ciaglo/Houston Chronicle Image 1 of / 1 Caption Close ‘Dominos were falling; now they’re standing back up’ 1 / 1 Back to Gallery

Buoyed by a resurgent oil and gas industry, the Midland-Odessa general economy is recovering from the deep downturn prompted by low crude prices.

The Midland-Odessa Regional Economic Index in February posted its third increase in the last four months, rebounding from a December-to-January decline.

“A year ago the dominos were falling; now they’re standing back up,” said Karr Ingham, the Amarillo economist who prepares the index for the Midland Development Corp.

He said that “even though the index is better than in previous months, it’s still below year-ago levels. But that rate of decline continues to narrow and the index should go positive in July or August.”

The February index was 7.4 percent below February 2016 levels, Ingham reported.

He expects “the recovery will be a very orderly process just like the onset of the contraction. We’ll see things happen in stages.”

A beginning stage is the index reaching its bottom, he said.

“The negatives continue to fall off the table of economic indicators with each passing month,” Ingham said, though the two most significant components of the index — consumer spending and employment — remain below year-ago levels.

Employment in Midland-Odessa was down only 1.1 percent in February from last February and is down 1.9 percent so far this year. The unemployment rate of 4.9 percent was below last February’s 5 percent, the first time it was below year-ago levels since February 2015. Ingham said that employment declines had ranged from 8 to 9 percent at the worst of the economic contraction.

In Midland, employment was down a mere 0.8 percent compared to last February and is down 1.7 percent so far this year. The February unemployment rate of 4.2 percent was unchanged from last February, and the year-to-date average of 4.2 percent is barely above the 4.1 percent of the same period last year.

Retail sales in February were 11.5 percent below last February and are down 7.9 percent for the year compared to the first two months of 2016.

In Midland, spending was down 19.4 percent from last February and is down 12.6 percent this year compared to last year.

Automotive spending continues to climb, recording a 14 percent gain in February over the previous February and a 17.6 percent gain so far this year over last year, which was about 30 percent below the spending in the first two months of 2015.

In Midland, February automotive spending was up 24.2 percent and is up 17.9 percent so far this year.

“We’ve been witnessing double-digit declines in spending and I think that’s done,” Ingham said.

Construction activity is on the rebound, with the value of all building permits up 15.2 percent in February over last February and up 8.5 percent so far this year. This is the first year-over-year gain in a year and only the second since March 2015, according to Ingham.

Midland building permit valuations were up 19 percent compared to last February but are down 7.4 percent so far this year compared to last year.

New housing construction has ended two years of steep declines with sharp gains. Midland and Odessa issued 117 new housing permits in February, up 74.6 percent from 67 last February. The two cities have issued 214 permits so far this year, up 68.5 percent from 127 last year.

The city of Midland issued 75 new housing permits in February, up 134.4 percent from the 32 issued last year. The city has issued 130 permits in the first two months of 2017, up 85.7 percent from the 70 issued a year earlier.

“The housing market (in Midland and Odessa) continues to amaze in every aspect,” said Ingham, noting that it had done a good job of weathering the downturn.

There were 224 existing homes sold in the two cities in February, up 16.7 percent from 192 last February. So far this year, 479 homes have been sold, up 37.6 percent from the 348 sold last year. The average February sales price of $238,419 is up 2.1 percent from last February’s average of $233,489. The year-to-date average sales price of $241,789 is up 4.7 percent from $231,014.

In Midland, 147 homes were sold in February, up 22.5 percent from the 120 sold last February. To date, 337 homes have been sold, up 53.2 percent from the 220 sold last year. The February average sales price of $264,980 is up 1.2 percent from last February’s $261,760 and the year-to-date average of $267,326 is up 4 percent from last year’s $257,035.

Ingham said the strength of the recovery of Midland-Odessa’s overall economy depends on the strength of the area’s oil and gas industry. And though there is some uncertainty about how strong crude prices will remain this year, he predicts there will be enough momentum from the oil and gas rebound to boost the overall economy this year.





