Numbers released earlier this week showed staggering unemployment projections due to the coronavirus—261,275 potential job losses through June, a 25.4% unemployment rate in the Austin metro. However, the lead economic consultant behind those numbers said there was light at the end of the tunnel.
Jon Hockenyos, president of the economic strategist firm he founded, TXP Inc., told Community Impact Newspaper that although the numbers are dreary in the short term, his firm projects everyone who lost their jobs from the coronavirus would be reemployed by the end of the calendar year.
Hockenyos explained all the job losses are related to the coronavirus and there are no “systemic problems” in the economy such as there were with the country’s financial institutions leading up to the crash in 2008. Hockenyos said some businesses will likely close permanently, but most people would still be in a position to be rehired or find other employment.
TXP Inc’s projections, presented earlier this week to Austin City Council, showed restaurants, building and grounds maintenance, personal care and sales-related industries would suffer the most significant losses. The hotel and lodging industry is also among the hardest hit—TXP Inc., estimated that April, May and June would bring occupancy rates of 5%, 5%, and 10% respectively.
“No question there is an economic crisis in our city,” Austin Mayor Steve Adler said during an April 8 news conference. “Twenty-five percent of people out of work is a horrific place to live in, but that’s the place we live in now.”
The report was meant to prepare the city for tough budget decisions ahead, including dipping into reserves and adjusting current spending limits. Hockenyos said the metro’s employment numbers have had a direct correlation with the city’s sales tax revenue. Growth in jobs yields growth in income, which yields capacity for increased spending, Hockenyos said.
Ed Van Eenoo, Austin’s deputy budget officer said, to date, the city is $10 million over the sales tax revenue projections made for the 2019-20 budget. Despite the positive track, TXP Inc’s report shows Austin could lose between $29.6 million and $40.2 million—11.9% and 16.2%—in sales tax revenue in fiscal year 2019-20.
Hockenyos said the projections would give Austin some lobbying power in trying to get money from the federal government.
“The city can go to federal government and say, ‘Hey, we’re really taking this in the teeth, we need some help,’” Hockenyos said.
However, he emphasized that his firm’s report is based on point-in-time information and, given the rapidly evolving nature of the situation, everything could change next month.
Projections showing major Austin metro job losses also predict significant re-employment by end of 2020
On a nearly empty South Congress Avenue, a resident plays guitar March 25. (Christopher Neely/Community Impact Newspaper)