DALLAS (NEWS RELEASE) — The following is a news release from the Federal Reserve Bank of Dallas:
The economic downturn that began with the arrival of COVID-19 in March 2020 looked more like a natural disaster than a typical recession, according to the latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy.
In “COVID-19 Slammed into Texas, Leaving Long-Lasting Impacts,” Emily Kerr, Judy Teng and Keith Phillips look at some structural changes left behind in the wake of the downturn, including:
- An increase in telecommuting and technology adoption.
- A shift from city centers to suburban regions and larger homes.
- A decline in business travel that, if slow to return, could impact industries such as airlines, hotels, restaurants, retail and convention centers.
- A decrease in fuel demand with implications for the Texas oil and gas sector.
Even amid the pandemic, net in-migration to Texas from other states remained high last year, and with the continued vaccine rollout, the state is expected to grow strongly in the second half of 2021.
“Structural changes and frictions in the labor market might impact the pace of job gains and a return to pre-COVID-19 employment levels in Texas,” the authors write. “Shifting demand toward less-dense, lower-cost-of-living areas, such as those in Texas, should support economic growth.”
In “COVID-19 Poses Stubborn Challenge to Economic Growth in Mexico,” Jesus Cañas and Chloe Smith examine that country’s tough road to recovery.
“The Mexican economy shrank 4.5 percent in 2020 as the pandemic ravaged factories, businesses and households,” the authors write. “It was the greatest contraction since the 1994 Tequila Crisis that followed a peso devaluation.”
Insufficient fiscal stimulus from the government has likely contributed to shrinking GDP, according to the authors, and testing for the virus remains an ongoing challenge.
This issue of Southwest Economy also features:
- A Spotlight article on how the pandemic has pushed Texas minority unemployment beyond highs reached during the Great Recession.
- An infographic on the impact of COVID-19 on Texas exports.
- An interview with Alan D. Viard, a resident scholar at the American Enterprise Institute, on how to address the U.S. budget deficit in the aftermath of the COVID-19 pandemic.
Read the full issue here: Southwest Economy, First Quarter 2021 – Dallasfed.org
(News release from the Federal Reserve Bank of Dallas)