Eric Griffin, Managing Director, Research & Innovation
As the nation continues to struggle with containing the COVID-19 virus, there is a mixture of positive short-term economic data coupled with signals that certain sectors of the economy will continue to feel the impacts of the economic downturn long into the future.
The unemployment rate is one of the most important economic indicators available because it signals the proportion of workers who actively want to be employed but are not currently attached to a job. The Bureau of Labor Statistics recently released national-level data for August, which show that the U.S. unemployment rate continued to fall from a high of 14.7% in April to 8.4% last month.
State and metropolitan data won’t be available until later in September. However, in July, the Texas unemployment rate decreased to 8.0%, down 0.6 percentage points from June. The Dallas Region unemployment rate decreased to 7.5%, which was 0.7 percentage points lower than June, and down 5.3 percentage points from a high of 12.8% in April. For comparison, during the Great Recession, the unemployment rate topped out at 8.7% in the Dallas Region.
View the full report: Economy in Brief: Indicators for the Dallas Region
However, economists have cautioned that the number of new jobs being created slowed in August even as the unemployment rate continues to decline. Approximately half of the more the 20 million jobs lost earlier in the year have been recovered. But the 1 million new jobs added to the economy in August was down from 4.7 million added in June and 1.5 million added in July. If the pace of job recovery continues to slow, a return to pre-pandemic job levels may take several years.
This situation is especially pronounced in the small business sector, which is characterized by a high rate of job creation and destruction, typically referred to as “churn.” Indications are pointing to a cooling of this churn as many more small businesses are closing due to the pandemic than during normal economic activity.
Data published by Harvard Professor of Public Economics Raj Chetty and his colleagues at Opportunity Insights revealed that both Dallas and Fort Worth are trending negatively in small business closures. As of August, the number of open small businesses in Dallas was 17% below normal and 18% below normal in Fort Worth. This follows initial hopeful indications ending in May that small businesses would continue reopening.
As the pandemic continues unabated without a vaccine or effective prevention measures to stop the spread of COVID-19, small business closures offer insight into medium- and long-term labor market impacts because 99.7% of enterprises nationwide are classified as “small businesses.”
“Economy in Brief: Indicators for the Dallas Region” is an ongoing series, presented by Bank of America, that offers easily digestible insights into our economic landscape. The data points and analysis tools allow our business community to make informed decisions based on trends. Our reporting also measures the impact of COVID-19 on our economy.