DALLAS - Houston's ride on the crest of the energy boom is officially slowing and could lead to an economic decline, according to an issuer comment from Moody's Investors Service.
"Until the energy sector returns to strong growth, we expect the area will experience employment losses, which will mute sales tax growth and, if oil prices continue to drop or stay low for more than a year, lead to a decline," Moody's analysts led by Adebola Kushimo said in the Feb. 6 report.
As home to more than 3,000 energy related companies, Houston and Harris County have enjoyed unequalled economic success compared to other major cities.
Headquarters employment doubled between 2007 and 2013, and oil and gas companies grew to nine of the top 10 major employers, from five of the top 10 in 2007, Moody's said.
"The trends are strongly correlated with the increased activity in the oil sector, where West Texas Intermediate crude oil prices increased 35.4% during the same time period," the report said. "Broadly, Harris County's total employment grew 8.4% between 2007 and 2013, according to the US Bureau of Labor Statistics. Oil related jobs increased during the same period by 19.3%, and jobs related to the oil and gas sectors accounted for 6.1% of the total employment as of June 2014."
Since oil fell from highs above $100 in August to lows below $45 in January, major employers have announced layoffs and mergers. At least one corporate bankruptcy has been recorded.
Despite the jolt, Houston officials say the nation's fourth-largest city has the economic diversity needed to weather the downturn.
Houston is home to more than 1,000 computer-related companies and has become an international center for healthcare with the Texas Medical Center, the largest center of its type in the world.
