When Dr. Ray Perryman talks about the Texas economy, people listen.
Perryman, the president and CEO of The Perryman Group, an economic research and analysis firm based in Waco, has been called “the most quoted man in Texas” by Texas Monthly, “a world class scholar” by Business Week, “the unofficial state economist” by The New York Times, and “the state's pre-eminent economist and a barbecue connoisseur” by the Dallas Morning News.
His enthusiasm for Texas barbecue aside, Perryman is cautiously optimistic the Texas and national economy will gradually recover from the drastic economic downturn linked to the COVID-19 pandemic.
However, he told Lone Star Standard that without another jolt of stimulus aid, the recovery will be slower and the damage far greater.
“Our latest forecast calls for a decrease in real gross product of -4.96% this year compared to 2019, which is a decrease of about $945.8 billion for the U.S. The loss in Texas is projected at about $90.2 billion,” Perryman said. “We expect the economy to gain most of this loss back in 2021 and to restore 2019 output levels in early 2022. It's important to remember, however, that the growth the state should have experienced this year has also been foregone. It will take a few years to restore the long-term trend, but we should be able to do so.”
He said the coronavirus seems to be loosening its grip on the country, but there are still hurdles to surmount. One is restrictions that impact businesses that rely on in-person sales.
“As long as hospitalizations stay at manageable levels, fatalities continue to drop, and vulnerable populations are protected, we should be able to avoid another major setback,” Perryman said. “Key variables have been trending downward for a while now, and unless things change dramatically, the economy can continue to reopen with caution.
“That said, additional social distancing requirements would slow the recovery,” he said. “We've seen notable job gains as high-contact businesses such as restaurants and retail stores have reopened, but that pace cannot be expected to be maintained. If additional distancing is implemented, the recovery would clearly slow even further.”
Perryman said government support is crucial during this challenging time. But the Senate, controlled by Republicans, and House of Representatives, under Democratic control, have been unable to reach an agreement on another relief bill.
Still, U.S. Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi have been meeting to try to forge a deal. The House passed a $3.4 billion package in May and has said it will lower that by $1 billion.
“One critical factor is the need for a significant stimulus package in the very near future,” Perryman said. “Many individuals and businesses have exhausted their liquidity.”
He said the economic downturn has lasted far longer than originally foreseen.
“The CARES Act, though not perfect, did provide some much-needed relief,” Perryman said. “It was premised on the belief, however, that the major disruptions would last two to three months. We are now seven months into the pandemic, and more assistance is necessary. When we entered the recession, we had been on a 10-plus-year growth run and the structure of the economy was basically sound. If we allow that structure to deteriorate, the recovery will be prolonged.”
He said the Perryman Group’s projections are not as reliable as in the past. It’s just that kind of year.
“The forecasts at this time are obviously subject to even more uncertainty than usual,” Perryman told Lone Star Standard. “The smoother the path to dealing with the health crisis, the faster we can return to growth.”
Perryman holds a bachelor’s of science degree in mathematics from Baylor University and a Ph. D. in economics from Rice University, as well as an honorary doctorate from the International Institute for Advanced Studies.
He has held numerous academic positions, is the author of several books, academic papers, trade articles, a monthly newsletter and a weekly column. In addition, he publishes an annual subscription forecasting service and hosts a daily radio commentary with frequent appearances on National Public Radio.
