Perryman: Outlook for the Texas Economy | Forum
As COVID-19 cases continue to decline and vaccination rates increase, things are starting to feel a bit more normal.
The economy is growing and the outlook remains positive as the health crisis eases. Here’s a look at current conditions and our latest projections for business activity in the state.
Texas has recovered more than a million of the nearly 1.5 million jobs lost in March and April last year due to the pandemic. The state created 13,000 jobs in April (on a seasonally adjusted basis) as large gains in a few industry groups, such as leisure and hospitality and professional and business services, were partially offset by losses in construction, manufacturing, mining and logging – which in Texas is primarily the oil and gas business – and several others.
The state’s unemployment rate has improved significantly, but remains above the national level. At the end of the day, although we are heading in the right direction overall, there are still a few bumps in the road.
One of the problems is the labor shortage, which was already a significant problem before the pandemic. Competition for knowledge workers and other skilled occupations is intense, industries like catering and hospitality struggle to convince employees to return to school, and childcare issues limit entry by many (especially women). Supply chain challenges also remain. The pandemic has disrupted the entire global manufacturing and distribution complex, and it’s quite a process to restore the relatively smooth operation that typically supports production processes. This situation leads to escalating costs and bottlenecks that inhibit or even interrupt business.
Our most recent forecast indicates that approximately 1.6 million net new jobs are expected to be added to the Texas economy by 2025, representing an annual growth rate of 2.39% over the period. This expansion is somewhat loaded upstream, as the state continues to regain activity lost during the recession and reverts to long-term patterns. Service industries will drive job creation, with wholesale and retail businesses also forecasting notable hires.
The actual gross project is expected to earn $ 424.4 billion over the next five years, and production in all major industrial groups is expected to increase, with the mining and service segments leading the way. In particular, the energy sector should continue its strong comeback.
I expect Texas to hit pre-pandemic employment levels within a year or two. The state’s combination of natural resources, a large and growing population, and the expansion of emerging industries position it well for expansion.
While there are challenges ahead, such as providing the education and training required for future jobs and securing the provision of critical infrastructure, Texas has the potential to remain a growth leader for the foreseeable future. .
– Mr. Ray Perryman is President and CEO of The Perryman Group, a Waco-based economic research and analysis firm. He contributes regularly to the News-Journal.