Mr. Ray Perryman
Our latest forecast update shows significant declines in economic activity through 2020, despite a noticeable return of gloomy spring days, but a return to growth next year.
In addition to the staggering and tragic human costs, the pandemic continues to reduce business activity. Despite this, the economy, which was healthy at the start of the COVID-19 crisis, signals resilience and potential for recovery.
The US job market continues to improve, but the pace of hiring is slowing.
Total non-farm payroll employment increased by 661,000 in September, and the unemployment rate edged down to 7.9%. These improvements in the labor market reflect the continued recovery in economic activity that had been slowed down. Notable job gains were in recreation and hospitality, retail trade, health care and social assistance, and professional and business services.
Recent production figures also indicate the resilience of the economy. Real gross domestic product grew at an annualized rate of 33.1% in the third quarter of 2020 according to the âforwardâ estimate released by the Bureau of Economic Analysis, a significant rebound after a dramatic drop in the second quarter.
Our latest projections show real gross product losses of -3.17% this year on an annual basis, with growth of + 3.44% in 2021. Job losses are expected to be -8.3 million through in 2020, with a recovery of +6.8 million jobs next year.
Previous peak employment levels are likely to recur in early 2022.
Texas is expected to fall back a little more than the country this year, but recover a little faster next year, in part due to the fact that the state’s largest export sector (oil and gas) has been particularly affected.
We expect Texas real gross product to decline -4.27% this year year-on-year, with growth of + 4.04% in 2021. Job losses are expected to reach nearly -549,000 through ‘in 2020, with a recovery of +315,400 jobs next year.
For the largest metropolitan areas in Texas, the decline in employment on an annual basis for 2020 is expected to range from 3.34% in the Dallas-Plano-Irving area to 4.23% in the Houston-The Woodlands area. -Sugar Land. The recovery in 2021 is expected to be strongest in the Austin-Round Rock-Georgetown, Dallas-Plano-Irving and San Antonio-New Braunfels regions.
As I have said several times since the start of the pandemic, the economic crisis is fueled by a health crisis.
The recovery is going to be uneven and a “new normal” will not fully materialize until effective vaccines and / or treatments are widely available.
Therefore, our projections are much more uncertain than unusual. If the recent surge in cases across the country forces major disruptions in business activity, the recovery will be slower.
Either way, Texas continues to be well positioned for long term expansion.
Mr. Ray Perryman, Ph.D., is President and CEO of The Perryman Group (www.perrymangroup.com
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