Dallas Fed: Texas loses 1.2 million jobs in April; employment likely to fall 11.7 percent in 2020
For Immediate Release: May 22, 2020
DALLAS—Texas lost 1.2 million jobs in April, a historic 69 percent annualized decline, according to seasonally adjusted and benchmarked payroll employment numbers released today by the Federal Reserve Bank of Dallas. The state lost a revised 44,600 jobs in March.
The Texas unemployment rate increased from a revised 5.1 percent in March to 12.8 percent in April. Recent increases in weekly initial claims for unemployment insurance in Texas suggest a further increase in the unemployment rate in May to close to 20.6 percent, according to the latest Texas Employment Forecast.
“The COVID-19 pandemic is unprecedented in recent history, and the standard time-series model that we use to forecast the Texas economy is unable to capture the rapid economic decline due to shelter-in-place mandates and social distancing nor the expected rebound in the second half as these constraints subside,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist.
As a result, the Dallas Fed employed an alternative framework to forecast the Texas economy. This model uses the pattern of growth forecast for the national economy and separate effects of low oil prices on the Texas economy. Using this model, the Dallas Fed estimates that jobs will decline 11.7 percent this year, and employment in December 2020 will be 11.4 million.
However, uncertainty about when the number of new COVID-19 cases and the death rate will begin to decline in the state, and if a second wave of infections will occur in the fall, make the forecast particularly uncertain, according to Phillips.
“While the rate of job decline in April was steepest in high-contact industries such as hotels, restaurants, personal care and retail, it was broad-based across sectors,” Phillips said. “Using the modified model, we estimate that employment will decline by a smaller percentage in May and begin to recover near mid-year, but prolonged weakness in the energy sector in the second half of the year will dampen the pace of the recovery.”
Unemployment rates jumped in all nine major Texas metro areas in April, according to seasonally adjusted numbers from the Dallas Fed.
The Dallas Fed improves Bureau of Labor Statistics (BLS) payroll employment estimates for Texas by incorporating preliminary benchmarks into the data in a more timely manner and by using a two-step seasonal-adjustment technique. Texas metropolitan-area unemployment rates from the BLS also are seasonally adjusted by the Dallas Fed.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748