The City of Houston sales tax receipts for June (reflecting April sales) were down 17% from last year following a 10% decline in May (March sales). While that makes for a pretty ugly chart, the decline is less than many feared. Because the City had enjoyed good sales tax growth before the COVID shutdowns, the collections for the calendar year are only off by 1.5%.
The sharp decline is reminiscent of the 2008 financial crisis. However, Houston entered the Great Recession with historic oil prices. WTI hit a high of $164 per barrel in June 2008. And while the price fell two-thirds to $50 in January 2009, it had recovered to over $80 by June.
But oil prices were already on a downward trajectory before the COVID recession, falling by half from 2014 to 2018. While oil has rebounded from its flash crash in March, the price has not been consistently this low since the early 2000s.
There are many who contend that Houston’s economy is less dependent on the energy industry than it was even 10 years ago. I think how quickly Houston recovers from the COVID recession will tell us a lot about how true that is.
