Unemployment shows slow economic recovery

A bartender waits for customers at Buck Wild on West Sixth Street in downtown Austin as bars reopened on May 22. Photo credit: Jordan Vonderhaar for the Texas Tribune

By Mitchell Ferman, The Texas Tribune

The Texas unemployment rate dropped to 6.9% in October, the U.S. Labor Department said, an improvement from the state’s September rate of 8.3% as a new wave of coronavirus infections this month could further threaten the economic recovery.

It was the latest sign of the state’s slow and uneven economic rebound from the first wave of the coronavirus pandemic this spring, when Gov. Greg Abbott closed businesses across the state to control the coronavirus. But a rapid rise in cases first over the summer, and now this month, have critics calling for Abbott to reimpose safety restrictions.

Abbott has ruled out “any more lockdowns,” hoping that Texas staying open for in-person business will help spur the kind of economic recovery he and other Texas leaders set out for when the state was among the nation’s first to reopen businesses after major shutdowns in the spring.

So far, the strong economic rebound has not happened. After a summer of improving unemployment rates, that number spiked to 8.3% in September, and some companies that had hoped to avoid layoffs were forced to do so in October, like energy companies Chevron and Pioneer Natural Resources, which combined laid off at least 1,000 Texas workers in October.

Congressional leaders also thought the economic pain would not persist so long — the massive rescue package passed by Congress at the beginning of the pandemic was aimed at supporting individuals and businesses through the spring and summer, when officials expected the virus to have calmed down.

“It’s not an economic meltdown driving unemployment, it’s the pandemic,” said Kaj Gittings, an economics professor at Texas Tech. “Once the pandemic gets under control, that’s what’s going to shrink unemployment meaningfully.”

Until then, economists and Texans fear that without another economic lifeline from Congress, there are likely several months of economic disaster ahead until a coronavirus vaccine is widely available.

“It’s a little dicey, these winter months coming up,” said Pia Orrenius, an economist with the Federal Reserve Bank of Dallas.