Houston official: Economy likely will not return to pre-coronavirus state until mid-2021
As the ongoing coronavirus pandemic and oil and gas downturn continue to cripple the Greater Houston area's economy, Patrick Jankowski, vice president of research for the Greater Houston Partnership, said he suspects the local economy will not return to its pre-coronavirus state until mid-2021 at the earliest. (Courtesy Adobe Stock)
As the ongoing coronavirus pandemic and oil and gas downturn continue to cripple the Greater Houston area's economy, Patrick Jankowski, vice president of research for the Greater Houston Partnership, said he suspects the local economy will not return to its pre-coronavirus state until mid-2021 at the earliest.
"The virus is in the driver's seat," Jankowski said in a May 12 webinar. "If we feel like we've got this thing in check and we're not going to have a huge second surge, then, yeah, by [quarter one] 2021, we should start seeing significant [economic] growth. But if we have a [coronavirus] resurgence, it's going to push the recovery back another quarter or two."
While the national unemployment rate has climbed to a historic 14.7%, Jankowski said a more accurate rate would be about five percentage points higher when taking into consideration those who are incorrectly classified and those who have dropped out of the workforce or are not searching for a job.
"The real unemployment rate in the U.S. is probably over 20%, probably closer to 21%—that would mean one in every five workers in the U.S. is unemployed, and that really is scary," Jankowski said.
Nationally, Jankowski said initial claims for unemployment insurance have declined each week after peeking in the week of March 22-28 at 6.86 million. However, the same trend could not be seen for the state of Texas. According to Texas Workforce Commission data, Texans filed 365,700 claims in the week of April 18-25, the highest number of claims filed in one week in the past two months.
"We're not seeing that sharp downward trend in Texas like we saw in the rest of the U.S.," Jankowski said. "I don't have a good explanation for this other than maybe the virus is [attacking] us a lot later than it attacked the rest of the nation. It could [also] be an issue with processing [claims]."
By comparison, claims in the Greater Houston area seemed to peak in the week of March 29-April 4 at 76,007 claims and have since steadily declined. 45,687 claims were filed the week of April 26-May 2.
"It's kind of heartening to see that it looks like claims peaked at the end of March [or the] beginning of April, and we're starting to get a steady decline in claims," Jankowski said. "It's still elevated, ... but you can definitely see the pattern. You can definitely see that claims are coming out at a lower rate each week, and so I hope this is a symbol that the worst of the layoffs and the worst of the downturn is over at least as far as unemployment goes."
In total, Jankowski said Greater Houston-area residents have filed about 388,000 claims for unemployment insurance since March 21.
"We're going to finish 2020 with a smaller economy, with less [gross domestic product] and less jobs than we started 2020 with," Jankowski said. "We're looking at some very serious downturns in the second quarter [of 2020], almost all of the forecasts that I've looked at show upturns starting in the third quarter and continued growth in the fourth quarter, but even by the end of the fourth quarter, we won't be back to where we started the year at, and we probably won't get back to where we started this year at probably until sometime in the middle of 2021."
Despite these job losses, Jankowski said there is hope on the horizon.
"It's been very trying times for us, but it looks like we're starting to see a little bit of improvement, a little bit of reopening," he said. "We really need to start seeing some growth and some economic activity, and hopefully, we'll start to see that in the third quarter [of 2020]."