January 2026

Most information reflected in this

report is through September 2025

By Karr Ingham

InghamEcon, LLC

The Odessa Economic Index declined for the third straight month – and the fourth of the last five months – in September falling to 251.7 down from (a slightly revised upward) 251.8 in August, but still up by 0.8% compared to the September 2024 OEI of 249.8.

The construction and housing indicators continue to put significant downward pressure on the index with sharp declines in building permit valuations and new single-family housing permits, and less severe declines – but declines nonetheless – in existing home sales. The price of those sales was higher on average, though, helping to prop up the total dollar volume of housing sales in Odessa.

General spending was lower for the month, but higher for the third quarter and year-to-date, while auto spending was higher across the board compared to year-ago levels. The employment situation is mixed, with continued modest job additions, but a higher unemployment rate. And the current employment data published may be suspect at this point as well, signaling that a downward revision may be in the offing in the coming months.

The Odessa Economic Index, having fallen for three straight months, declined at an annualized rate of 6.0% in the third quarter of the year.

The Texas Permian Basin Regional
Oil and Gas Economy

The regional oil and gas economy is feeling the weight of lower prices for crude oil and natural gas, and a rig count that continues to fall. Crude oil prices (posted WTI) fell below $60/barrel in September at $59.45 on average for the month. That is down from $65.56 in September of a year ago, and over $85/bbl in September 2023.

Natural gas prices in the Permian Basin were somewhat improved earlier in the year, but those gains have now evaporated, and Waha hub natural gas pricing fell below $0 once again in September at -$.70 on average for the month.

The Texas Permian Basin rig count (RRC districts 7C, 8, and 8A) fell to 167 in September, down from 204 in September 2024, and the post-COVID cyclical high of 253 in January 2023.

The Texas Alliance of Energy Producers Texas Permian Basin Petroleum Index fell in September, retreating to 231.2 down from 231.7 in August, but still up by 3.4% from the September 2024 TPBPI of 223.7.

More regional indicators are beginning to worsen along with falling crude oil and natural gas prices and the declining rig count. The number of drilling permits issued is down by nearly 20% for the year, and completions, a lagging indicator, are now beginning to falter as well.

Crude oil production in the Texas Permian is now beginning to fall off a bit as, again, output growth in New Mexico is outpacing production growth on the Texas side.

Direct upstream (exploration and production) oil and gas employment in Midland-Odessa is still improving slightly according to the current Texas Workforce Commission estimates. However, my strong suspicion is that these numbers are going to be revised downward in the next month or two. The level of rig count decline along with price weakness in 2025 suggests industry employment loss, not gain, at least to some degree.

The Odessa General Economy

The same could easily be true of total employment in Odessa, as some other underlying data suggest that current monthly estimates may overstate Odessa employment and employment growth. These revisions, which are a part of an annual process, are scheduled to be released in early March.

Meanwhile, current estimates continue to show modest year-over-year employment growth at 1.4% in September, suggesting the addition of about 1,200 jobs over the last 12 months. The Odessa unemployment rate has been climbing in 2024 and 2025, spiked a bit in September compared to its year-ago level at 4.1% compared to 3.6% in September 2024.

General real (inflation-adjusted) spending per the September Odessa sales tax rebate was down by 9.7% compared to the September 2024 total, which in turn was down by nearly 4% compared to the prior year. For year-to-date, spending is up by a respectable 4.2% compared to the first nine months of a year ago, though spending growth in the third quarter narrowed to 1.0% year-over-year.

Auto spending remains higher in 2025 compared to a down year for auto sales in 2024. Inflation-adjusted spending on new and used motor vehicles was set a new September monthly record and was up by over 15% compared to September of a year ago. Third quarter real auto spending was up by 5.5% year-over-year, while the year-to-date total outpaced year-ago levels by 4.8%, though neither of those is a record for the respective time periods.

Construction in Odessa is having its worst year since 2009, at least according to the valuation of new commercial and residential building permits issued. The September inflation-adjusted valuation total was down by nearly 50% compared to September of a year ago, while the third quarter and year-to-date building permit valuations are off by 41% and 30%, respectively.

New housing construction is sharply lower as well with the number of permits issued down by nearly 27% through the first nine months of the year. Third quarter permits were down by over 53%, and the September monthly total was down by a sharp 57%.

Existing home sales are faring some better, though still down for the month, quarter, and year-to-date. September home sales were down only slightly at 1.5% year-over-year, while in the third quarter home sales were down by nearly 16%. The year-to-date home sales total is down by about 6% compared to year-ago levels. The average prices of those sales posted an 8% year-over-year increase in September, however, and a2.7% increase in the third quarter. The year-to-date average home sale price is up by less than a percent, however.

The total real (inflation-adjusted) dollar volume of home sales activity is lower in 2025, down by nearly 9% through September, including a sharp 17.3% decline in the third quarter.

The near-term trends are very likely downward on balance for both the Odessa general economy and the regional oil and gas economy, and of course, one is in large part caused by the other. In the oil patch, price and activity levels have continued to weaken, and there is a strong possibility that industry employment is lower than current estimates suggest, which means payrolls are on the way down. The oil and gas industry is increasingly pessimistic about near-term prospects for recovery in the oil and gas sector. In Odessa, those sentiments can easily be applied to the broader economy as well.

For more information on how the Odessa Development Corporation can help your local business expand, contact our office at (432) 333-7881.