Dallas Fed says Texas firms were better prepared for latest COVID surge
Texas businesses had an easier time weathering the latest surge of coronavirus cases during the late summer and fall, according to a new report from the Federal Reserve Bank of Dallas. The bank’s surveys of the manufacturing and service sectors show companies were more resilient and better prepared to operate, due to the availability of COVID-19 vaccines and more information about how the virus spreads.
Dallas Fed associate economist Christopher Slijk, who co-authored the report, said despite the spread of the more-contagious delta variant, Texas firms did not see the same steep declines in consumer demand as they did last winter.
"Thankfully, this time, even with infections and hospitalizations getting quite high, we really didn't see that same effect on economic activity," Slijk said.
This time around companies in the state did not face lockdowns or other public health restrictions imposed earlier in the pandemic that led to a sudden, and significant drop in production, revenue and employment.
The report does find, however, that the delta variant contributed to acute labor shortages over the summer. More than 30 % of the firms the Dallas Fed surveyed in August said staffing shortages due to COVID-19 cases among employees, quarantining, and difficulty hiring, restricted revenues. That’s up 10 percentage points from the pandemic wave the state faced during the summer of 2020.
Still, Slijk said the Texas economy's durability amid the more contagious delta variant is a good sign for next year.
"Our forecast for the year is that we'll finish off the year quite strong and probably be back to pre-pandemic levels of employment sometime in the first half of next year," Slijk said.
Ongoing supply chain issues and labor shortages will likely have a greater impact on economic activity than COVID-19, Slijk added.
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