Texas Weekly Leading Index
Based on data through July 17, 2021
The Texas Weekly Leading Index decreased for a third straight week. The index has been gathering impetus and is pointing toward higher future economic activity as the reopening of the economy continues. Unfortunately, after months of declines in COVID-19 cases the number of new cases has increased due to the number of people not yet vaccinated combined with the presence of the Delta variant that has shown to be more contagious. 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. It was offset by an increase in the number of new business applications. The elevated number of new business applications signals strong future business activity.
Texas’ initial jobless claims have increased for two straight weeks to 44,256 the week ending July 17 as the labor market continues to gradually recover. In addition, continuing unemployment claims increased to 187,779 the week ending July 10. The increase in initial claims occurred even after Texas opted out of further federal unemployment assistance starting June 26, 2021. Transitions from unemployment to employment have likely been reduced by the effect of the pandemic on women since they were more likely than men to leave their jobs to take care of children because of in-person school and daycare closures. This outcome should be reverted once schools and daycares return to in-person learning and caregiving in the fall. Other possible factors affecting the transition from unemployment to employment could be the lingering pandemic, early retirement, and the possibility that people are taking more time to consider other career paths. 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 took somewhat of a hit as the number of new cases reverted their downward trend and continued increasing the week ending July 17. It is important for vaccination rates to increase at a higher rate. This would continue to benefit consumer behavior, increasing business activity that would increase hiring and allowing people to return to the labor force. Currently, 52.3 percent of the states’ population 12 years and older is fully vaccinated based on the most current data (07/28/2021) from the Texas Department of State Health Services.
In addition, a marginal increase in the real rate for the ten-year Treasury bill (which continues to exhibit a negative return in real terms) contributed to the fall in the weekly index. In contrast, an increase in the real price of West Texas Intermediate (WTI) oil countered the decrease in the weekly index.
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 the full report