Despite Texas employment growing faster than United States employment, business owners are still wary of long supply chains, according to Joe Tracy, executive vice president at the Federal Reserve Bank of Dallas.
Tracy presented his thoughts and findings at the annual Greater Houston Builders Association economic forecast luncheon. He noted Houston economically outperformed the country during the pandemic in 2021 and will likely do so in 2022 as well.
“COVID[-19] has caused both domestically and internationally real supply problems. Markets are trying to ration the existing demand with a supply,” Tracy said.
In a survey sent out to businesses experiencing supply chain disruptions or delays, a majority of them said they expected it to be at least a year before their supply chains became normal again.
“Firms are starting to get more pessimistic about the duration of some of these supply chain problems,” Tracy said.
Tracy attributed this change to when a large number of businesses closed down at the beginning of the pandemic to try to flatten the curve so as to not overwhelm hospitals. Instead, it led to disrupted supply chains, causing delays and shortages.
“We don't want to overwhelm our health care system. They basically tried policies of shutting down a lot of businesses where there was high contact between the business and their customers,” Tracy said.
Even with most businesses trying to stay open, the omicron variant has been causing staffing problems, leading to a restricted ability of businesses to be able to operate, according to Tracy.
Tracy also mentioned the labor market is recovering, but it s still not back to the levels it saw in 2019. With Houston being an energy metro, it is one of the cities that is still recovering its lost jobs.
“We can see actually there are a number of metro areas in Texas where they’re [back to] pre-COVID [levels], but Houston is still going to take a little bit of time,” Tracy said.