The Texas economy is anticipating a negative economic impact due to the slowdown that has occurred due to COVID-19 shutdown of businesses.
According to The Texas Tribune, Texas is suffering from the national lockdown that has been put into effect to help slow the spread of the novel coronavirus.
While it is still unclear about how much the state will be affected by the virus and subsequent closures of businesses, there is no doubt that it will be substantial.
Julia Coronado, financial consultant with McCombs School of Business as University of Texas at Austin, commented on the economic impact of the virus.
"It’s going to hurt,” Coronado said. “There’s the health shock and the oil shock. It’s going to be an extra hit on the state’s economy.”
Director of the Center for Public Finance at Rice University’s Baker Institute John Diamond spoke about the unemployment rate in Texas and the nation as a whole — the state unemployment rate is 3.5% and the national is 3.6% — and their likelihood of worsening.
“I wouldn’t be shocked if we saw unemployment levels here up to 5%,” Diamond said.
Other experts, such as Larry Stuart, an employment lawyer in Houston and business professor at Rice University, said that employers will likely struggle to keep their employers working, pushing many to seek out unemployment benefits — another strain on the state economy.
“There’s a good chance we’re going to go into a recession,” Stuart said. “And that doesn’t bode well for longer-term employment.”
The oil crisis is also coming at an inopportune time, especially for Texas where much of the local economy relies on the energy industry.
Keith R. Phillips, economist with the Federal Reserve Bank of Dallas, said that Texas will probably be “pulling down the national economy this year” due to the massive downturn in the energy sector which recently saw oil prices dip to $22 a barrel from more than $60 a barrel at the start of the year.
“It’s really a difficult spot for small businesses right now because they don’t know how long this is going to last,” Phillips said. “And I wish I could tell them. I wish I knew that.”
