2018 was nothing short of a remarkable year of expansion and growth.
Texas Insider Report: AUSTIN Texas The Midland and Odessa area economies had a very good year said economist Karr Ingham noting that the Midland-Odessa Regional Economic Indexs trend remained in expansion mode throughout 2018 with consumer spending and housing construction hitting record highs. Ingham who prepares the Midland Economic Index for the Midland Development Corporation recently presented his annual findings to the group.
The Midland Economic Index ended the 2018 year 17.6 higher than the end of 2017 while the Odessa Economic Index prepared for the Odessa Development Corp. was up 16.2 in 2018.
The overall Midland-Odessa Regional Economic Index Ingham said surpassed its previous record high in April and ended the year up 16.9 when compared to the end of 2017.
2018 was nothing short of a remarkable year of expansion and growth in the Odessa metro area general economy and that trend is solidly reflected in the Odessa Economic Index throughout the year said the economist.
The Midland-Odessa Regional Economic Index has now seen 26 consecutive months of increase Ingham said climbing 37 during that time.
Ingham who also prepares the Texas Permian Basin Petroleum Index for the Texas Alliance of Energy Producers said that index had recently snapped a two-year growth streak by declining in November and December 2018. Crude prices have recovered a significant portion of what was lost in November and December noted Ingham which could possibly lead to stabilizing activity and overall economic growth.
Not once in its history has even a one-month decline in the Petroleum Index not signaled the onset of a sustained period of industry contraction thereby leading to general economic contraction in the Midland-Odessa area Ingham said while noting this may be the first time the general economy avoids being impacted by the areas petroleum industry.
Ingram said he saw a minor slowing in the regions year-over-year growth rate as the year progressed -- the Midland-Odessa Regions 16.9 growth rate was down from a 2018 high of 21.6 in May with fourth-quarter growth slowing to an annualized rate of11.1.
That likely has more to do with the fact that a 20-plus rate of growth is probably not sustainable over an indefinite period of time than it does the unexpected decline in the regional oil and gas economy over the last two months of the year Ingham said.
Almost every component of the index finished 2018 with double-digit increases with the exception of airline boardings -- which Ingham said were down 8.2 in December compared to the previous December but were up strongly for the year -- and existing home sales which were down 1.7 in December from December 2017 but up strongly for the year.
Retail Spending reached record annual levels climbing 35 in 2018 compared to 2017 which was up 20 over 2016 levels. Spending also set a new quarterly record with a 27 gain over the fourth quarter of 2017.
In Midland retail spending was up 32.2 in 2018 over 2017 levels while fourth-quarter spending was up 26.8 from the same quarter a year earlier.
Odessa retail spending jumped 38 in 2018 over 2017 which was up 27 over 2016 levels. Fourth-quarter spending was up 27.2 compared to the final three months of 2017.
Automotive spending for the area in 2018 was up 32.4 over 2017 which was up 28 over 2016 spending. Automotive spending also set a quarterly record with a 28.3 over the fourth quarter of 2017 which was about 40 above 2016 spending.
The other pillar of the regions economies employment also finished strong in 2018. The unemployment rate dropped 28.3 to an average of just 2.5 in 2018 down from 3.5 in 2017. The unemployment rate fell to 2.3 in the fourth quarter down some 14.9 and the December unemployment rate of 2.3 was down 9.9 from 2.6 the previous December.
Midlands unemployment rate fell 26 to average 2.2 in 2018 compared to 3 in 2017. The Tall Citys unemployment rate averaged 2.1 in the fourth quarter down 11.3 from 2.4 a year earlier.
In Odessa the unemployment rate fell 30 to average 2.9 in 2018. In the fourth quarter it dropped 18.1 to average 2.6.
Midland-Odessa employment rose 6.7 to average 177835 people employed for the year up from 166600 in 2017. Fourth-quarter employment rose 4.5 to average 180435 up from 172665 in the fourth quarter of 2017 and the December average of 180900 was up 4.3 from 173400 the previous December.
Midlands employment rose to an average 101965 in 2018 up 9.2 from 93415 in 2017. In the fourth quarter employment averaged 103900 up 7 from 97065 in the fourth quarter of 2017.
In Odessa 2018 employment averaged 75867 up 3.7 from 73185 in 2017. Fourth-quarter employment averaged 76535 up 1.2 from 75600 a year earlier.
Ingham said he believes Odessas employment estimates are almost certainly dramatically understated especially in the latter half of the year. He predicted that when the Texas Workforce Commission issues its revised employment data next month Odessa will see a significant upgrade.
Construction activity in 2018 continued what Ingham referred to as a rapid recovery with the total of all building permits rising 37.6 to $963.2 million. That compares to $699.9 million in 2017. It was the third highest total in the history of the index behind 2013 and 2014 and fourth-quarter values were up 41 over the fourth quarter of 2017. Ingham said the permit total for December 2017 was the lowest since December 2010.
In Midland building permit totals for 2018 totaled $571.6 million up 64.2 from $348.2 million in 2017. Odessa permit totals rose 11.3 to $391.5 million in 2018 up from $351.7 million in 2017.
New housing set records across the board Ingham said and it wasnt even close. The 1778 new housing permits exceeded 2017s total of 1330 by nearly 450 permits or 33.7.
He also noted that fourth-quarter and 2018 sales totals set records breaking those set the previous year. In the fourth quarter alone 1104 homes were sold and for 2018 there were 4521 homes sold exceeding 4500 for the first time ever.
The average sales price for 2018 was $282925 up 8.9 from $259771 in 2017.
Odessas housing market was significantly stronger as well. In the fourth quarter 430 homes were sold up 23.9 from 347 a year earlier. For the year 1713 homes were sold up 29.2 from 1326 in 2017.
Decembers average sales price was $221460 up 6.1 from $208649 last December.
In 2018 the areas Hotel & Motel Taxes shattered previous records set in 2014. Year-to-date taxes collected were $283.3 million up 87.4 from $151 million in 2017.
In Midland hotel-motel revenue rose 88.6 to $158 million up $87.3 million from a year earlier.
Odessa hotel-motel revenue followed the trend rising 85.9 to $125.2 million from $67.4 million in 2017.
