San Antonio’s unemployment rate fell in May after spiking to a record high in April, but the recent explosion in COVID-19 cases and a new round of state-mandated business closures and restrictions could temper the city’s economic recovery.
San Antonio gained 32,000 jobs in May as unemployment fell to 11.8 percent last month, down from 12.7 percent in April, the Federal Reserve Bank of Dallas reported.
Economists chalked up much of the decline in unemployment to the economic reopening that’s taken place in Texas in recent weeks.
Despite the jobs added last month, data from the Dallas Fed show San Antonio shed a total of nearly 120,000 jobs in March and April.
After regaining some economic steam in May, the rise in COVID-19 cases and hospitalizations and Gov. Greg Abbott’s subsequent decision to partly reverse the re-opening of Texas businesses could spell more layoffs, economists said.
On Friday, Abbott issued an executive order once again closing bars and rolling back restaurant capacity. The day before, he directed hospitals in Bexar, Dallas, Harris and Travis counties to postpone nonemergency surgeries.
READ MORE: Texas bar shutdown likely dooms many San Antonio-area bars
Keith Phillips, a senior economist at the Federal Reserve Bank of Dallas, said he began seeing data earlier this month showing restaurant reservations and employee staffing levels were falling off after picking up in May, when Abbott initially lifted business restrictions.
That dropoff in business activity correlated with the sharp rise of COVID-19 cases locally since June 1.
Confirmed cases have nearly tripled in San Antonio since the start of the month. And Bexar County has reported its highest one-day increase since the start of the pandemic.
“You can see staffing levels at small businesses really increased pretty good between April and May, then started lowering but were still growing until mid-June. And now we’re seeing staffing levels fall off,” Phillips said. “If (COVID-19) gets out of control, will it have a big effect on the economy? I’m pretty sure it will, whether mandated from the government or people mandate it themselves.”
Economists said the May jobless figures, while an improvement, ignore that many laid-off workers have been misclassified and therefore don’t show up in the statistics as unemployed.
“There was a bit of improvement in the unemployment rate between April and May, but in general, these unemployment rates are underestimating the actual true nature of unemployment,” said Michael Horrigan, president of the Michigan-based W.E. Upjohn Institute for Employment Research.
New unemployment claims, which have steadily declined each week since peaking in April, remain historically high.
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Nearly 4,800 workers in Bexar County filed for unemployment in the second week of June, the 13th straight week with large numbers of new jobless claims in the county.
Last week, another 90,000 workers across Texas filed for unemployment. Since the pandemic struck the Texas economy in mid-March, nearly 2.6 million workers statewide have filed unemployment claims.
Persistently high levels of new jobless claims and the COVID-19 resurgence could cause fluctuations in the unemployment rate in the coming months.
“The unemployment rate might go up and stay up there for a while, depending on how people react to this,” Horrigan said.
The surge in cases also heightens uncertainty surrounding the end of federal unemployment benefits at the end of July.
Unemployed workers receive the $600 weekly benefit of top of their weekly state benefit. But federal lawmakers have shown little appetite for extending the full additional benefit beyond July 31.
“The $600 had a dual purpose: income protection and ‘please stay at home,’” Horrigan said. “If states reopen, then all of sudden have these surges and close down the economy again, lay off a lot more workers, then are (lawmakers) really going to end that $600?”
Phillips said consumer spending has been stable and rent payments have remained mostly on-time in recent months thanks largely to government-expanded unemployment and the $1,200 federal stimulus checks.
“At the end of July, that could change quite sharply,” Phillips said. “It’s going to be a lot more painful if these federal benefits run out.”
Conservatives have argued the unemployment benefits unnecessarily encourage unemployed workers to avoid looking for jobs.
Some proposals have called for maintaining unemployment benefits at a level lower than $600, but lawmakers haven’t signaled how Congress will proceed.
Phillips noted the spike in confirmed cases has come after Memorial Day. That the Fourth of July is next weekend is concerning, he said.
The closures announced by Abbott may not drive the unemployment rate up much, Phillips said. But the rise in COVID-19 infections could cause unemployment to remain at a high level for a longer period of time than previously expected.
The unemployment rate “might not fall as much as we thought, at least in June and July, and maybe even further out. We’ll have to see how and if this virus is contained,” Phillips said.
“If this thing keeps spreading, all that stuff we did was in vain back in April and May,” he said. “I just pray and hope that’s not the case, but it’s looking really bad.”
diego.mendoza-moyers @express-news.net
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June 27, 2020 at 04:00PM
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San Antonio's unemployment dipped in May, but new uncertainty is ahead - San Antonio Express-News
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