“More difficult times to come,” says economist

0
92


Are you still feeling good? This is not a trick question.

On Friday, the government announced that unemployment in Texas had dropped sharply, from 13% in May to 8.6% in June. This is a significant drop and well below the national rate of 11.1%.

Texas added 225,000 jobs last month, according to the US Bureau of Labor Statistics, and the number of unemployed in Dallas-Fort Worth fell 29%.

“Labor market figures for June show that we are going in the right direction,” Texas Workforce Commission president Bryan Daniel said in a statement.

Except the numbers are a month old and conditions have deteriorated since then – in Texas and much of the United States.

This week, new daily cases of COVID-19 surpassed 70,000 in the United States for the first time. As of June 12, when the payroll investigation was completed, the United States had fewer than 25,000 new cases.

In Texas, hospitalizations and deaths have broken records and some hospitals are swamped with sick patients. Many regions, including Dallas County, have suspended back-to-school time, which is always a boost for the local economy.

“We have more time to spare,” said Bernard “Bud” Weinstein, an economist at the Cox School of Business at Southern Methodist University. “I’m not putting a lotta stock into the one-month drop in the unemployment rate, because now we’re one of the hot spots for the pandemic. “

He noted that a number of large companies have announced significant job cuts, including JC Penney, American Airlines and United Airlines. Later this month, a $ 600 supplement to weekly unemployment benefits is expected to end.

Meanwhile, unemployment demands have increased. Last week, the Texas Workforce Commission estimated that 143,500 people had applied for unemployment benefits – 61% more than the week of June 20.

“The situation is clear,” said Pia Orrenius, senior economist at the Federal Reserve Bank of Dallas. “We came back in May, earlier than expected, and we are still making progress in early June. Everything looked good – it looked like a V [shaped recovery].

“And then there was a huge resurgence of the virus, and everything turned around,” she said.

Because conditions have changed so quickly, she said, more Dallas Fed economists are tracking high-frequency data, such as mobility and engagement indices, credit card spending and the so-called US Census Bureau pulse polls.

Census pulse surveys showed employment in Texas topped the country in May and the first half of June. Then the numbers for Texas fell sharply, falling below the United States in late June and continuing to lag until mid-July.

“There has been a quiet change,” Orrenius said. “The trajectory since mid-June has been quite different.”

On June 25, shortly after reopening restaurants, bars and amusement parks (with various restrictions), Governor Greg Abbott said the state would press the pause button. The next day, he closed bars and reduced maximum occupancy at restaurants, and ordered rafting companies to suspend their trips.

On July 2, Abbott said Texans should wear masks in public in counties with at least 20 cases.

Some leaders have called for another lockdown of the economy, both to relieve pressure on healthcare workers and to reduce the spread of COVID-19. The infection rates are so high that it is difficult to consider reopening schools and many businesses.

The Dallas Fed is now forecasting that Texas will lose 619,000 jobs this year, down 4.8%. Last month, the Dallas Fed predicted a 3.2% drop in statewide jobs this year.

One of the reasons for the downward revision is that employment in the oil and gas industry continues to decline. Jobs in mining and logging fell more than 3% last month and 24% year over year through June.

This percentage drop is deeper than in leisure and hospitality, which have been caught off guard by the pandemic.

Last month, even the public sector lost workers in Texas, which was another negative indicator.

“Usually, government employment is more stable during a downturn,” Orrenius said.

Signs of a US recovery plateaued in early July, according to Oxford Economics. Cautious consumers are cutting spending and COVID-19 cases are on the rise in 39 of the 50 states, which account for nearly 90% of GDP, Oxford economists wrote this week. This increases the chances of another recession if the health crisis continues to be mismanaged.

“There is a big risk that the job market will become flexible again,” said Oren Klachkin, senior economist at Oxford. “Don’t let the economic data for June fool you into believing that we are done with the virus.”

Many Republican leaders, led by President Donald Trump, have insisted that reviving the economy is as important as the fight against COVID-19. What the past few months have shown is that challenges are inseparable.

“Right now, where the virus is going, the economy is going,” Orrenius said. “There is no way around this. “

UT Southwestern Medical Center, a leader in academic medicine, has seen a sharp increase in COVID-19 cases among its employees.  But a number of precautions, from universal masking to adequate personal protective equipment, have kept infection rates below that of Dallas County.
Many companies are delaying their return to downtown Dallas, and this is a prudent choice.  Almost one in four American workers is at higher risk of serious illness from COVID-19 because of their age or health condition.
Doctors examine a CT image of a lung in a hospital in Xiaogan, China.

LEAVE A REPLY

Please enter your comment!
Please enter your name here