Western Blue Chip Current Update
May 11, 2020
The states included in the Western Blue Chip Economic Forecast are Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Texas, Utah, Washington, and Wyoming.
SPOTLIGHT ON TEXAS
There remains tremendous uncertainty regarding the extent of the downturn and the pattern of recovery from the effects of COVID-19. In Texas, the collapse of the oil market is adding to the losses and the uncertainty. Much will depend on the ability to reopen the economy in a responsible manner without generating additional outbreaks
Dr. Ray Perryman, President and CEO of The Perryman Group
The coronavirus has had a devastating impact on the Texas economy. In addition to the general shutdown of business activity, falling oil prices have resulted in tens of thousands of layoffs while the state’s treasury will be severely depleted from the lack of energy industry related revenues.
Dr. Bud Weinstein, Economist and Associate Director of the Maguire Energy Institute, Texas Southern Methodist University
NEVADA, WASHINGTON, CALIFORNIA HARDEST HIT BY JOB LOSSES
The national unemployment rate rose to 14.7 percent in April, as reported by the U.S. Department of Labor on May 8. This is the highest monthly unemployment rate of the entire post-war period, surpassing the 10.8 percent prior peak in December 1982. In March 2020, the national unemployment rate was more than 10 points lower, at 4.4 percent. The spike in the unemployment rate is due to lockdown policies in most states, intended to combat the COVID-19 pandemic through closures of non-essential businesses and stay-at-home restrictions. The result is that some 16 million workers were added to the unemployment rolls in April, as determined by the U.S. Department of Labor household survey and tally of individuals looking for work, bringing the total to 20.6 million.
Although the unemployment rate is higher than at anytime since the Great Depression, other labor market indicators paint an even more dire picture of current conditions. Claims for unemployment insurance (UI) have increased rapidly as the economy weakened. Meanwhile, regulations on qualifications to apply have been loosened. Starting with the report from the U.S. Department of Labor for the week of March 21 and combining subsequent reports through the week of May 2, national cumulative initial UI claims exceed 30 million, or 20.4 percent of March employment levels (see table).
Cumulative Initial UI Claims as a Percent of Baseline Employment
|State||UI Claims 3/21-5/2||Employment March 2020||Percent Jobs Lost|
Sources: UI claims are cumulative initial claims from the week of March 21 through May 2 reported by U. S. Department of Labor.
March employment baseline is from U. S. Bureau of Labor Statistics survey during the week of March 12. Data are not seasonally adjusted.
In three Western states, cumulative UI claims as a percent of baseline March employment exceed the national figure. Nevada’s job loss as measured by UI claims is 29.3 percent, followed by Washington at 27.7 percent and California at 21.8 percent. In Nevada, hospitality industry employment accounts for a quarter of all jobs, more than double the national average for all states. At the national level, the hospitality industry, including accommodations and food service, has lost more jobs than any other, and this affects Nevada more than most other states.
Cumulative unemployment claims are 3.8 million in California and 1.8 million in Texas, accounting for 18 percent of the national total of 30.7 million. However, UI claims in Texas, as of now, represent only 13.1 percent of March employment. Other states with lower percent of job losses include Colorado (13.1), Wyoming (11.5), and Utah (9.9). It should be noted that many states have developed backlogs of claimants, so the figures in the tables should be viewed with this in mind.