The Texas Weekly Leading Index decreased the week ending Sept. 25 after increasing the previous week (Figures 1 and 2). The index points toward higher future economic activity as the economy continues to reopen. Unfortunately, after months of declines in COVID-19 cases, the number of new cases has risen due to the presence of the more contagious Delta variant. This has increased uncertainty surrounding the end of the pandemic.
The index’s decrease was mainly due to an increase in the number of people filing for unemployment insurance and by a decrease in the number of new business applications. Even though the number of new business applications fell, it remains high, signaling business activity remains strong.
Texas’ initial jobless claims increased to 21,482 the week ending Sept. 25. Continuing unemployment claims increased to 156,552 the week ending Sept. 18. Although both initial and continuing claims registered a weekly increase, their downward trend and return to pre-pandemic levels indicate improvements in the transitions from unemployment to employment as schools and daycares returned to in-person learning and caregiving in August. The lingering pandemic, early retirement, and the possibility that people are taking time to consider new career paths could be other factors affecting the transition from unemployment to employment. Record job openings suggest that while the economy is still short of pre-COVID employment levels, it is not due to insufficient labor demand.
The outlook for the reopening and recovery of the state’s economy improved as the number of new cases seemed to have peaked and continues to fall (Figure 3). The effects of the upsurge in COVID-19 cases and hospitalizations due to the Delta variant are apparent in the loss of 25,600 jobs in the leisure and hospitality sector during August. Currently, 61.3 percent of the state’s population 12 years and older is fully vaccinated based on the most current data (Sept. 27, 2021) from the Texas Department of State Health Services.
In addition, an increase in the real rate for the ten-year Treasury bill (which continues to exhibit a negative return in real terms) contributed to the decrease in the index. In contrast, an increase in the real price of West Texas Intermediate (WTI) oil countered the decrease.
The rebound in Texas’ economic activity could be hindered by possible upsurges in COVID-19 cases as economic and social activity increases. Further waves of infections can reverse increased mobility and spending, affecting the path to recovery. […] read more