Odessa economy slowly rebounding after pandemic slump

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ODESSA, Texas (Nexstar)- The Odessa Economic Development Department of the Odessa Chamber of Commerce released its economic report for the month of September. The report shows the Odessa economy is experiencing slow, but steady, growth after a significant pandemic slump. 

According to the report, general spending was up significantly in September and the third quarter, though spending remains lower for the year-to-date compared to year-ago levels, while auto spending is higher across the board, at least compared to the much lower activity in 2020.  Employment posted its third straight monthly year-over-year increase though the rates of growth remain generally in check thus far.  The Odessa unemployment rate continues to come down steadily but remains well above its pre-COVID levels.

Oil and gas prices are sharply higher through the third quarter 2021 and other measures of activity are gaining momentum as well. Of the over 18,000 direct oil and gas jobs lost in Odessa-Midland between April 2019 and July 2020, about 5,500 of those have been added back through September 2021, including nearly 600 jobs added from August to September.  The Texas Permian Basin rig count is also improving slowly but steadily, adding four rigs on average in September to 172, an increase of 97 rigs compared to the July 2020 monthly average, which was the cyclical low point last year. The number of drilling permits issued across the region was nearly double the September 2020 total, and the number of permits issued for the year-to-date is up by about 28% compared to the first nine months of a year ago.

The report says auto sales activity was up sharply in September with inflation-adjusted spending on new and used motor vehicles up by over 35% compared to September of a year ago.  Third quarter real auto spending was up by 10% year-over-year, and year-to-date auto sales are up by 6.0%. 

The number of single-family residence building permits issued remains at a record level through September with over 800 permits issued in the first nine months of the year. The third quarter permit total surpassed 300 for the first time as well and was up by nearly 50% compared to the third quarter 2020 total.

Existing home sales also set third quarter and year-to-date records in terms of the number of closed sales, up by 20% and 30%, respectively, compared to year-ago levels.  The September monthly total of 145 closed sales was the second highest on record behind only the 152 sales logged in September 2018.  The average price of those sales is essentially on par with year-ago levels, though the third quarter average was up by 4.4% compared to the third quarter 2020 average, which in turn was down by 4.5% compared to the third quarter of the prior year. Through September real home sales activity is up by over 26% year-over-year, while the third quarter total is up by over 22%.

Passenger enplanements at Midland International Airport are also up by about 50% year-over-year, but monthly enplanements are still down by about 15,000 compared to the high point in 2019 before the numbers began to decline, even in advance of COVID.

The economic development board says the contraction in the Odessa general economy, which was set in motion before COVID-19 came along in 2020 but was made vastly worse by the virus and its related impacts on oil and gas activity, is climbing out of a deep hole, and still has a long way to go before a full recovery is achieved.  Six months into the recovery, the Odessa Economic Index remains over 66 full points below its peak in 2019.  It will likely take the better part of two years to cover that ground, and hopefully not longer.  But both the regional oil and gas economy and the Odessa general economy are moving in the right direction and are firmly in the midst of a sustained recovery that hopefully gains momentum in the coming months.

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