FEATURE STORY
Economic Mid Year Forecast Highlights D
r. Ray Perryman, president of the economic and financial analysis firm with Perryman Group, spoke to the
approximately 560 guests at the annual GHBA Mid Year Forecast Luncheon. The following are key points made concerning the economy both nationally and locally.
“In the third quarter of 2009, the Gross Domestic Product (GDP) grew by approximately 1.6 percent.” While that number represents a small jump, it was significant in terms of the context of the downturn. Dr. Perryman explained of that 1.6 percent, 1.5 percent was car sales.” This phenomenon was due to the government rebate program ‘Cash for Clunkers.’
In the fourth quarter of 2009, the GDP grew by a high rate of about 5 percent. In the first quarter of 2010, it grew by about 3.7 percent. “That’s when we said the GDP growth was slowing down a bit,” Perryman reported. “And then the next quarter (second quarter of 2010) was about 1.7 percent.”
Midway through 2010, Dr. Perryman explained that the media was dramatizing the doom-and-gloom of the economy. There were many reports circulating noting it was slowing dramatically and speculating a double-dip recession.
“It was only about 2 percent the next quarter (third quarter of 2010),” said Dr. Perryman. “It rose slightly the fourth quarter, just over 3 percent.” In the first quarter of 2011, it dropped to 1.8 percent.
“I think close to 3 percent is something that Houston can probably sustain,” said Dr. Perryman. He concluded it wasn’t a trendsetter, “but demonstrated slow, healthy growth.”
“If you give Houston 6 to 9 months, we are going to have a very strong couple of quarters and that will help get us back on track.” The slow recovery can be attributed in part to corporate America’s uncertainty, which has historically withheld about $600 to $700 billion in cash on any given day. Dr. Perryman said today, corporate America is sitting on about $2.4 trillion in cash, which is about four times the normal amount.
Dr. Perryman concluded with the factors contributing to the success of Texas. They include our robust mineral sector and a strong conservative banking industry.
“Another factor was that our housing industry was not dramatically overbuilt. We gained in round numbers about 400,000 people a year. On average there are approximately 1,200 people a day moving to Texas,” Dr. Perryman noted.
“If you add 400,000 people a day to an economy, you’re going to need 150,000 to 160,000 housing units,” he said. “At the peak of construction during this mortgage crisis, Houston goes through approximately 215,000 houses.”
Comparatively, he explained that in 1983, when the state was smaller and needed approximately 130,000 units, “We didn’t build 215,000, we built 290,000. This resulted in a huge inventory that could not be absorbed.”
Dr. Perryman commended in this last recession, the builders stopped building very quickly once the downturn was imminent. The immediate response to the economy enabled a much quicker absorption rate.
Perryman concluded by saying, “Nationally, the bottom line is we are probably about 6 to 9 months waiting on any little spurt in growth. But overall, here in Texas, we’ve done a bit better.”
PHOTO LEFT: Lunch sponsor Greg Tomlinson, Builders Post-Tension Inc; GHBA Associate Vice President Kathleen Stadler, ELD Engineering LLC; Brian Q. Conley, Builders Post-Tension; Michael McNall, Builders Post-Tension; GHBA President Mike Dishberger, Sandcastle Homes; KC Cox, Weyerhaeuser Co.
Luncheon Sponsors: Builders Post-Tension Inc
403 RICHEY RD. HOUSTON, TX 77090
Speaker Sponsors:
Tabletop Sponsors:
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AUGUST 2011 | HOUSTON BUILDER | GREATER HOUSTON BUILDERS ASSOCIATION – BUILDING A BETTER FUTURE
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