A Local Economic Update: 2020 A Year Sharply Felt

Texas economic update

We are all aware of the economic happenings in the U.S. and our great state of Texas. Our team is working with clients that are facing all kinds of different year end results this pandemic year. Depending on the industry, some have shown a decline in sales due to the pandemic. Some are flat. Some are having their best year ever. For every client, though, 2020 has been a year sharply felt.

The Unemployment Rate in Texas Will End the Year Below December 2019 Level But Much Improved from Q2

After outperforming the national rate this past spring, the unemployment rate in Texas is now lagging behind national unemployment numbers. The unemployment rate in Texas peaked in April at 13.5%, but has since declined to 6.8% in August.

Employment growth in the state was behind in Q3. At present, it continues to show a modest recovery. The Dallas Fed forecast predicts it will be slower to recover than the national average. Texas labor markets are in worse shape along the border and in energy-based metropolitan centers like Houston.

But in Austin and Dallas, the job losses were not felt as severely. Austin’s high-tech sector offered them some stability, Dallas’ economic situation continues to be favored as a location for entrepreneurial business.

On the job loss front since February, Texas’ pandemic job loss was historic, but most other states lost more jobs than Texas. Despite the summer setback, Texas has performed relatively well during the pandemic compared to the national average and to other large states.

Oil and gas was the hardest hit industry in Texas, with Leisure and Hospitality a close second. All other industries in Texas fell below a 10% job loss rate. The Texas Weekly Employment Estimate suggests that improvement in job growth will continue.

Improvement in Job Growth Will Continue, But Small Business Closures Continue As Well

In Texas, the service sector recovered in August, and the manufacturing sector seems to be continuing to expand reaching similar levels to pre-pandemic numbers. Company outlook also continues to recover and has improved since August.

The two industries representing the highest number of employees – government jobs and professional and business services jobs – had two of the lowest job loss rates. Spot On Talent works with numerous business and professional services companies and has continued to assist them placing high-quality candidates in desirable positions throughout 2020.

Small business closures in Texas have accelerated in recent months, led by closures in the leisure and hospitality industry. The end of the PPP program may accelerate small business failures.

The Dallas Fed predicts there will be more layoffs to come in airlines, energy, retail and other sectors. Other risks to the outlook include the recent trend up in COVID-19 cases and the political uncertainty due to the election, which can hamper some capital expenditures.

Consumer Spending in Texas Sees Recovery with Dallas Homes Being One of the Most Sought-After Purchases

Consumer spending in Texas exceeded pre-pandemic levels for the first time in August as spending on restaurants and hotels began to rise. So far, only credit cards in Texas are seeing rising delinquency during the pandemic. Auto loans, mortgages and home equity loan delinquencies have remained steady at 2019 levels. Student loan delinquencies have improved

DFW for one is experiencing a record high home sellers’ market. Inventory of homes for sale is at its lowest in years. Mortgage rates are at historically low levels as well. Home ownership is also at a record high.

Corporations continue to choose Texas as a destination for their headquarters. Inter-state movers still favor Texas more than any other destination. This drives the demand for homes. Apartment rents are on decline 5 – 10% in major Texas metro areas.

Office market vacancy rates are trending up in all major metros. Corporations continue work-from-home policies and forego office space altogether.

On a positive note, the Texas Leading Economic Index has ticked up for the third straight month, bringing it back to its March reading. In putting together any type of economic outlook for the year 2020 and beyond, there is so much uncertainty. Having the right talent in the right positions is key for all businesses.

Spot On Talent is here to make sure clients are successful in this difficult year by matching them with the specific talent that they need to recover. We will move forward. We will take your company to the next level.