Coronavirus is adding a new layer to the economic uncertainty always seen in a presidential election year, and the wild ride it’s giving markets is certain to continue, economist Ray Perryman said.
It’s a ride Texas Bank and Trust CEO Rogers Pope Jr. called “quite a roller coaster” in his introduction of Perryman in the 2020 Economic Outlook as part of the TBT Insight Series.
“We don’t know where this is going, and that in itself is the issue,” Perryman told about 200 people at Pinecrest Country Club in Longview, adding that he doubts the virus will be either as bad or as good as some are saying.
At the same time, the Texas and area economies remain strong, hindered mainly by shortages in the workforce and a lack of education.
“East Texas is growing and doing quite well,” he said. “It’s growing a little less than the state, but more than the U.S.”
While offering occasional updates of Thursday’s rout on Wall Street, the president and CEO of The Perryman Group in Waco recapped some major events of recent days: wild swings in the Dow Jones industrial average (it fell 970 points Thursday after what he called a “Biden bounce” a day earlier sent it soaring 1,200), sliding oil prices, a half-point cut in interest rates by the Federal Reserve and the Super Tuesday presidential primary elections in Texas and other states.
Amid all that, Perryman said, the only certainty is uncertainty as the new coronavirus continues to spread to more aspects of life in the U.S. and around the world.
“My advice is to get used to it,” he said. “But it’s temporary.”
As more is known about the coronavirus and how to contain it, the economy will stabilize.
In East Texas and across the state, the biggest roadblock to growth is a shortage of trained workers.
“We simply don’t have enough bodies here to support the growth,” Perryman said. “It’s going to put a lid on how much we can grow.”
He offered a rhetorical question as part of the solution: “We’re not growing enough of our own people to meet our needs. Do you have any ideas where we might find some more?”
Immigration policies that keep potential workers outside U.S. borders “do not make sense,” he said.
“This is not politics. It’s arithmetic, and not very complicated arithmetic,” Perryman said. “It says we desperately need immigration reform. We need the kind of policy that allows us to bring these people in.”
His new outlook showed the Longview-area population is expected to grow 0.8 percent through 2024, exceeding the U.S. rate of 0.72 percent but falling well short of the statewide rate of 1.39 percent.
“But there’s every other reason to expect that East Texas will do quite well,” he said.
For example, the health industry is making big investments and will continue to add jobs, he said.
His projections for the area show all five major industry segments will expand over the next five years. The outlook calls for a nearly 2 percent annual growth in mining, the sector that includes energy; nearly 1.5 percent annual increase in wholesale and retail trade; and a 1.11 percent increase in construction.
In employment, Perryman’s outlook calls for a 1.71 percent annual increase, which will amount to about 11,300 new jobs by 2024. That nearly matches his projection for population growth of 11,743 during the period. At the same time, he projects that employment across the state will increase 1.9 percent annually and the national increase will be 1.56 percent.
After his remarks, Perryman took questions, including one about the probability of increased investment in infrastructure in Texas and the U.S.
“Texas has massive infrastructure needs,” he said, adding that the current budget for roads in Texas amounts to about 94 percent of what is needed just for maintenance. That means construction and expansion to accommodate growth in population and industry are falling further behind.