Between the huge boost from the 2017 upward employment data revisions and the big chunks added to the index over the last two months, the Odessa Economic Index has closed the gap much more rapidly than was expected and is now approaching its all-time record high of 231.9 achieved in January 2015. The index added over four full points month-to-month for the first time ever, improving to 228.7 in February up from 224.5 in January, and up over 20% from the February 2017 OEI of 190.3. The index is now just 1.4% -- about 3.3 points – below its January 2015 pinnacle, strongly suggesting the index will move into record territory and a new round of real growth in either March or April 2018.
It is easy to see why – the February table of Odessa economic indicators reflects stratospheric year-over-year gains in most components of the Odessa Economic Index, with only monthly building permit valuations down compared to year-ago levels. The spending indicators are 40-50% higher year-over-year, along with home sales activity. Hotel/motel revenues and the issuance of new single-family housing construction permits are nearly double year-ago levels. The unemployment rate is down sharply, and job growth continues at an extraordinary pace.
The regional oil & gas economy continues its rapid expansion as well through February with the Texas Permian Basin Petroleum Index up again for the month at 296.8 up from 291.6 in January, and up 29% from the February 2017 TPBPI of 230.3. February posted crude oil prices are some 17% improved compared to year-ago levels, but natural gas prices are regionally depressed thanks to the increasing inability to move Permian-produced gas – in large part gas associated with crude oil production – to the marketplace. This developing problem, which already has Permian prices at the lowest in the country, threatens to push gas prices down yet further as 2018 progresses and could ultimately slow crude oil development as well.
For now, however, the rig count continues to climb, crude oil production has moved into record territory, and thousands of industry jobs have been added over the last year. Even at that, however, most measures of activity other than production are still well below pre-downturn peak levels, as is the Texas Permian Basin Petroleum Index itself. The industry remains in sharp recovery mode in the region, though, and is pushing general economic growth to ever higher – and soon to be record – levels.
General real (inflation-adjusted) spending per February sales tax receipts in Odessa posted a new February record as did the total for the first two months of the year, up by 43.6% and 42.4%, respectively compared to year-ago levels. Real auto spending is also setting new records with each passing month up by 50% year-over-year in February and 48.5% for the first two months of the year.
Hotel/motel activity has not yet surpassed the peak numbers from late 2014 and early 2015, but the next quarterly set of numbers may well do the trick as lodging revenues in the city are growing sharply up by 95% compared to year-ago levels.
The February real building permit total was down by about 23% compared to February of a year ago; the January-February total is up just slightly compared to year-ago levels and is the third-highest total on record for the first two months of the year. New housing construction is deep into record territory in early 2018 with 83 permits issued in February – nearly double the total from February 2017 – and 159 permits issued in the first two months of the year. That marks the first time the January-February permit total has exceeded 100, much less 150 permits; and the 159 permits issued in the first two months of the year is up by nearly 90% year-over-year.
Believe it or not the home sales totals in 2006 and 2007 are the highest on record; however, existing home sales in 2018 are a close third, and are sharply higher compared to year-ago levels with February monthly and year-to-date closed sales up by 47% and 38%, respectively. Prices have appreciated greatly since then, however, and that means the total real dollar volume of residential real estate sales is easily at a record level in early 2018.
The word is appropriate at this point – the Odessa economy is booming in 2018, expanding at a record pace and racing toward a new all-time aggregate high level as represented by the Odessa Economic Index.