New report shows economic impact of COVID-19 in BCS area
by the Texas A&M Private Enterprise Research Center shows the impact of the shelter-in-place order on the local and state economy.
The May issue of 'Economic Indicators of the College Station - Bryan MSA' paints a different picture than usual. Andrew Rettenmaier, the Executive Associate Director of PERC explains.
"This month we have the beginnings of the official numbers relating to unemployment, sales tax revenues, and nonfarm employment that come from the Bureau of Labor Statistics and the comptroller at the state of Texas," said Rettenmaier.
Their models are usually based on data that has a two-month delay, but their most recent report has more up-to-date statistics on local and state unemployment claims, drilling permits, daily traffic, and airline travel.
The analysis shows travel out of Easterwood Airport in the month of April was down about 96%, which is just 3.6% of normal airline travel compared to April in 2019. Rettenmaier says based on the numbers they're seeing for the month of May, the future of air travel is already beginning to look up.
"Towards the end of the data from just this last week, instead of being only 3.6% it’s now about 7.5% so you can see the rate of return, at least on some of these metrics is gradual, but it’s going in the right direction," said Rettenmaier.
The unemployment rate in the Bryan-College Station MSA in the month of March was recorded at 3.8%, compared to the state at 4.7% and the nation at 4.4%.
Michael Parks with Brazos Valley Council of Government explains why he believes the local unemployment rate is lower than the state and the country.
"When the rest of the economy is up or down because of some national or global event, our service sector here in the Brazos Valley is stable because of Texas A&M University, Blinn College, independent school districts, or city and county governments. A number of our residents are working for those agencies and entities and so, therefore, their paychecks are pretty consistent and so, therefore, our economy is pretty consistent," said Parks.
In April, the national unemployment rate rose to 14.7%. Rettenmaier says with the more positive trends he's seeing during the month of May, it appears April could have possibly been the hardest hit month of the pandemic.
"Overall, we've seen this big effect of coronavirus on the economy. Its initial impact is unlike all other recessions. It was dramatic and it happened abruptly, but as we've seen since the middle of April, there has been a gradual movement back towards normalcy," said Rettenmaier.
The study shows a dramatic increase in the local number of unemployment insurance claims per week. Rettenmaier says the highest number of initial claims they've seen in this pandemic was in the week of April 9th with about 1,900 claims. Rettenmaier says the numbers for the month of May looks much different.
"Our number is now 804 for the week ending May 9th so that number is moving in the right direction. It's lower than it was the previous week and so far it's the lowest initial claims that we've had since March 21," said Rettenmaier.
Parks says he and his colleagues at BVCOG and Workforce Solutions Brazos Valley want to help make that weekly number even smaller.
"We want folks working, who want to work, and there are opportunities galore. Not only for folks who have been working, but we’re also in the season of college graduates looking for jobs. We’re hopeful that the economy that we had prior to COVID-19 will pick up right where it left off. That’s all we can hope for. It’s our job here at Workforce Solutions Brazos Valley and BVCOG to assist folks in that endeavor," said Parks.
Rettenmaier says nationally, the number of unemployment insurance claims per week is declining. During the week of March 28, they saw the highest number of claims during the pandemic with 6.8 million new claims. In the week of May 16th, they saw 2.4 million claims.
The business-cycle index in the study shows the local rate down 2.2% for the month of March. Rettenmaier says this model is based on the movements in four variables: the unemployment rate, nonfarm employment, the wages in the total community, and taxable sales. He explained why the local rate has decreased.
"Because the unemployment rate has risen, and that is a big driving force in this business-cycle index that we produce, sales tax data has gone down and nonfarm employment has gone down a little bit," said Rettenmaier.
According to the study, the price of oil has fallen in the past month by well over 50%, and approved drilling permits in Texas fell by 40% from March to April 2020. In the Brazos Valley, only six permits were approved in the month of April. Rettenmaier says it's one of the lowest they've seen in the last two years.
"This will have a significant impact on the state's budget and it will affect not just the budget, but the livelihood of a lot of folks," said Rettenmaier.
Rettenmaier says it appears the economy is slowly creeping back to normal.
"At least at this point, the reduction in activity during the month of April was significant and what we've seen since then in the latter part of April and the early part of May, we've seen a bit of a return, but it's been slow," said Rettenmaier.
"I think the main takeaways from today is that no one is actually immune from these kinds of events," said Parks. "Even as good as our economy is, there are still things we can do to help survive during this time, to work together and make sure that we do you come out of these times. That we can get back to work right where we left off. I think there’s plenty of optimism going around and again I don’t want to diminish the hard times some folks find themselves in but at least what I found during this time is that we have come together as a community, as a state and a nation even and were able to fight this together."