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2021 Mid-Year Overview

July 6, 2021Doug Peters, President & CEO of the Abilene Chamber of Commerce

Partnership is the cornerstone of the Abilene Chamber of Commerce and its affiliate organizations.

Strategic alignment with a variety of partners allow your Chamber to work closely with many to ensure the interests of Abilene-area businesses are preserved.

One such partnership exists between the Chamber and the Federal Reserve Bank-Dallas. That partnership provides for a deep pulse on regional activity that assists local decisions and the fine-tuning of strategy that belies the work that we undertake on behalf of our growing membership.

The following is a recent release that provides some such perspective.

Your Chamber is grateful for the Fed and our many relationships that help us to help our members.

Solid recovery in the Texas economy continues, although the pace of growth has generally eased in recent months. State job growth was 2.5 percent in May and a robust 4 percent year to date (annualized rates). More than two-thirds of the 1.4 million jobs lost at the initial onset of the pandemic have been made up during the recovery so far (Chart 1). The Texas unemployment rate ticked down to 6.5 in May, still elevated but down significantly from it’s Apr. ’20 peak of 12.9 percent.

Real-time data from the Dallas Fed’s Texas Business Outlook Surveys point to robust expansion in manufacturing and services. Keep in mind the survey diffusion indices do not track the level of activity, but the direction of change, with positive index readings denoting expansion and negative readings denoting contraction. The higher June manufacturing reading indicates expansion accelerated this month, despite soaring costs and widespread supply-chain disruptions and hiring difficulties. While the service-sector index slipped in June, it remained well above average and signifies continued broad-based growth. The retail sector remains challenged by supply and inventory shortages and posted slightly negative index readings in both May and June.

Looking ahead, firms are generally optimistic for stronger business activity six months from now, though uncertainty is on the rise. The Dallas Fed employment forecast is for continued job growth in Texas through December, ending the year with jobs up just over 4 percent from last December. This means we expect the overall pace of job growth through yearend to roughly match what we’ve seen year to date so far. If realized, this forecast would mean the state will fall short of fully making up for the pandemic job losses, leaving employment about 150,000 jobs short of its Feb. ’20 level. However, forecast uncertainty remains heightened as intensifying price pressures, widespread supply-chain challenges and mounting labor shortages present downside risk to the outlook.

Perspectives from Pres. Kaplan

Last month Dallas Fed President and CEO Rob Kaplan published an article entitled The Labor Market May Be Tighter than the Level of Employment Suggests, found at www.dallasfed.org/research/economics/2021/0527. He suggests that policymakers should be cognizant of a range of supply factors that may currently be weighing on employment.

 

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