Texas Is Back in the COVID Soup
The recent surge in COVID-D cases and the associated drop in available intensive care unit capacity in Texas hospitals represents a significant downside risk for the economy of Texas. To date, state officials are expressing no appetite for tightening social mitigation policies. However, in all four of Texas’s major urban areas, DFW, Houston, San Antonio and Austin, local officials are beginning to tighten policy. Even if there is no return to restrictions on business activity, there will be some economic drag from the current surge in COVID cases as consumer and business confidence is impaired and consumer activity is voluntarily reduced. Also, with global energy demand held in check due to the pandemic and OPEC oil production set to increase, crude oil prices have moderated back to below $70 per barrel. Natural gas prices have also leveled out after doubling over the past year to $4 per MMBtu. The rate of increase in the Texas drilling rig count diminished into early summer after a strong increase last fall and through the winter. We expect to see only-moderate gains in the rig count through the second half of this year as pressure from energy demand in both the U.S. and China eases. Even with these headwinds, we expect the Texas economy to continue to be a growth leader for the U.S. We expect to see significant federal spending bills emerge from Congress this fall and Texas will be a beneficiary. Another positive for Texas is the confirmation from the 2020 Census that Texas saw strong positive net-migration through 2020. We are forecasting ongoing strong in-migration for Texas.
For a PDF version of this publication, click here: August 2021 Texas State Outlook
