Texas Weekly Leading Index
Based on data through August 28, 2021
The Texas Weekly Leading Index increased for a third straight week the week ending Aug. 28 (Figures 1 and 2). The index 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 risen due to 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 increase was mainly due to a decrease in the number of people filing for unemployment insurance, and it was offset by a decrease in the number of new business applications. Even though the number of new business applications fell, the number remains high, signaling business activity remains strong.
Texas’ initial jobless claims decreased for six straight weeks to 20,562 the week ending Aug. 28. Also, continuing unemployment claims decreased for two straight weeks to 165,799 the week ending Aug. 21. The labor market continues to gradually recover as the transitions from unemployment to employment have likely been reduced by the effect of the pandemic on women, who 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 during 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 time to consider new 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 continued trending upward the week ending Aug. 28 (Figure 3). Currently, 56.9 percent of the state’s population 12 years and older is fully vaccinated based on the most current data (08/30/2021) from the Texas Department of State Health Services.
In addition, an increase in the real price of West Texas Intermediate (WTI) oil contributed to the increase in the weekly leading index. In contrast, an increase in the real rate for the ten-year Treasury bill (which continues to exhibit a negative return in real terms) offset the increase in the index.
Based on both the Texas Weekly Leading Index and U.S. employment numbers from August, which increased by 0.2 percent over July, Texas nonfarm employment could increase 0.2 percent in August. If so, the Texas economy could gain around 25,000 jobs in August, reaching 12.7 million. In a span of 16 months the Texas economy could recoup around 1.2 million of the 1.4 million jobs lost between March and April 2020.
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