FEATURE
CORONAVIRUS:
THE SHORT-TERM OUTLOOK FOR THE TEXAS ECONOMY By M. Ray Perryman
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T
he inevitable result of measures to “flatten the curve” and prevent a major spike in COVID-19 infections has been a strong shock to the economy. Many factors will determine the ultimate effects of the coronavirus on the economy, most of which are highly uncertain at present. The outcomes of reopening the economy and the capacity of businesses to resume normal activities are among myriad phenomena that will play a significant role. Things are changing quickly and will no doubt be different when you read this article than they are as I write it (mid-June). The discussion below represents what we are seeing at this time. The Perryman Group’s forecast for the Texas economy calls for a significant drop in business activity for 2020,
but a return to growth next year and even later this year. Measures taken to slow the spread of COVID-19 have had substantial negative effects, including causing downturns in key export industries such as oil and natural gas. However, the state is well positioned for recovery and expansion once social distancing requirements can be relaxed and the economy fully reopens (assuming that major spikes in the virus do not necessitate additional business interruptions).
Economic Recovery from the COVID-19 Pandemic The massive layoffs and sharp increase in unemployment has led to ubiquitous comparisons to the Great Depression. However, prior to the Great Depression, there were massive structural problems in the economy and policy responses were less well understood. The major harm of the Great Depression was not that joblessness likely spiked above 30%; it was, rather, that
THE SHORT-TERM OUTLOOK FOR THE TEXAS ECONOMY
26 Texas Society of CPAs
