(FORTUNE Magazine) – If you've been eyeballing your seismograph lately, expecting to see the economic implosion of Houston, may we suggest you turn your attention elsewhere? Despite its reputation as a gaudy boomtown that periodically goes bust, Houston seems ready to shrug off the troubles at three of its most visible corporate inhabitants--Enron, Compaq, and Continental--as though they were mere fender-benders on the way to church.

Of course it's painful for residents of the nation's fourth-largest city to watch Enron--once a civic booster's dream in a place where everyone is a civic booster--turn into a work of accounting fiction. But the underpinnings of Houston's economy are far more stable now than in the late '70s and early '80s, when the city prospered on the belief that oil would soon hit $100 a barrel (it's now at $20). Back then, U-Haul barely knew what to do with all the trucks and trailers being driven to Houston by young white guys in search of instant wealth. The solution, it turned out, was to wait for the inevitable crash: Houston lost 225,000 jobs between 1982 and 1987--12% of its total--according to the local Federal Reserve Bank office.

It won't be nearly as bad this time, despite a string of high-profile layoffs. Following the plunge in air travel after Sept. 11, Continental declared it would furlough several thousand Houston employees. More than a year earlier, Compaq began to sag, its earnings pulled lower by a worldwide slowdown in demand for computers. It laid off 9,400 workers worldwide and agreed to be acquired by Hewlett-Packard, whose CEO said another 15,000 employees from the combined company might lose their jobs if the controversial merger is approved in March. Enron's 4,500 layoffs seem small in comparison.

But Enron gave Houston something it yearned for even more than good jobs: glamour. "It combined energy and technology with enormous intellectual sophistication," says Stephen Klineberg, a pollster and professor of sociology at Rice University. Enron and its leaders were generous, too, making large donations to the city's museums and universities. When tropical storm Allison inundated the offices of the Houston Symphony last year, executives moved into free digs donated by Enron. The new baseball stadium downtown would never have been built without the leadership of Enron CEO Ken Lay, says Fred Fowler, an executive at nearby Duke Energy.

Despite its high profile (and nonstop self-promotion), Enron was never the linchpin of the local economy. "It's just one company that failed," insists Lee Brown, the buttoned-down mayor of Houston. "It laid off 4,500 employees; we've gained and lost that many workers in a month many times before." Business has already picked up for Continental, which has hired back more than half the 2,000 employees it laid off. Even Compaq's woes are not symptomatic of trouble in some vast high-tech sector of the Houston economy. For better or worse, Houston doesn't have a high-tech sector beyond Compaq. Telecom startups have tended to settle mostly in Dallas, while computer companies followed Dell to Austin. Houston did not have a tech bubble to burst.

The city appears poised to retain many of the bright and prosperous traders that Enron lured there. UBS Warburg has acquired Enron's core energy-trading operation and says it will keep 625 of the 800 workers. Perhaps more important, a large and resilient energy-trading industry made up of dozens of smaller rivals like Dynegy, El Paso, and Reliant had already sprung up around Enron, with enough critical mass to keep running. "If [Enron] had failed three years ago, it would have been a very big event," says Jim Donnell, head of energy trading at Duke Energy's Houston office. "As it was, the biggest trader filed for bankruptcy, and there were no interruptions of deliveries."

Donnell says many Enron workers have already been hired elsewhere. "Last year, well before the bankruptcy, we started getting resumes, when Enron's stock began to drop." Even now, says Donnell, top talent is still in high demand. "Other trading companies are still trying to hire away my people. There isn't a glut." Indeed, at a government-run center set up near Enron's offices to help laid-off workers land jobs, officials admit they are puzzled by how few Enronites have come in for assistance. "Back in the '80s, I'd be talking to 500 workers at a time who'd been laid off from drilling-equipment makers," says Roger Drushel.

Just because Houston isn't collapsing, though, doesn't mean it's about to boom. Its $230-billion-a-year economy headed into 2002 "with virtually no forward momentum," says Bill Gilmer, a Federal Reserve economist. Many of the new jobs created during the '90s were in the plastics and petrochemicals plants along the Houston Ship Channel and the Gulf Coast. Those industries thrived on the low cost of petroleum feedstocks, offsetting some of the local pain caused by low energy prices. But now an excess of petrochemical capacity is causing revenues to fall. Construction jobs, abundant when the plants were expanding, are drying up. In a place where half the jobs are closely tied to oil and energy, Houston will create only about 10,000 new jobs this year, predicts Gilmer, one-tenth as many as in recent years.

Nonetheless, it is difficult to find anybody truly pessimistic about the future of Houston, though that may reflect a character defect common to all Texans, and not economic reality. In a city long accustomed to powerful business leaders, people just assume the disgraced Ken Lay will soon be supplanted. "Someone will ride in on their big white horse," says Priscilla Larson, head of the Downtown Houston Association. Prod Mayor Brown even a little and he launches into an unstoppable litany of works in progress: airport expansion, a bigger convention center, a new rail line, new cruise ships, a new football team, a colossal new football stadium...

For all its newness, though, Houston is beginning to mature, like a mining-camp madam who becomes a lady. Its museums and symphonies are substantial and impressive. It has slowly realized that its sterile, suburban-style downtown office buildings, with their absurd green lawns, detract from the density and bustle that make cities exciting. For the first time in memory, developers are building high-rise, New York-style condominiums downtown, designed to house Houstonians weary of the car-oriented life in the 'burbs. Some people will miss the fevered days of freewheeling Houston. But most would probably rather settle down with a respectable lady than a boomtown tease.

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