The COVID-19 pandemic has officially pushed our economy into recession. The record-breaking decade-long streak of 113 months of consecutive job growth in the United States came to an abrupt end in March and worsened in April with job losses in excess of 22 million resulting in an unemployment rate of 14.7%, far eclipsing the peak of 10.0% in the Great Recession.
Fiscal stimulus in the form of direct payments and supplemental jobless benefits along with swift and thorough monetary policy enacted by the Federal Reserve have helped millions of American families endure the economic fallout. These aggressive actions bought us time to better understand the underlying health crisis and begin charting a path to recovery.
The Texas economy began reopening in a phased approach following the expiration of the state-wide stay-at-home order on April 30. Businesses and consumers are understandably eager to return to broader economic activity. Indeed, initial economic indicators show that a nascent recovery is underway – after shedding a total 1.4 million jobs in March and April, Texas added 238 thousand jobs in May. Given the overwhelming concentration of job losses in the service sector, it is encouraging to see data from the restaurant reservation service Open Table show a steady increase in traffic across the country now back up to 57% of demand year-over-year. The next challenge is to ensure the recovery is sustainable. Texas has already chosen to scale back reopening efforts as new cases manifest through community spread.
It is also encouraging to see demand for petroleum recover following a devastating April that briefly saw negative oil prices when storage capacity was strained by the collapse in U.S. petroleum consumption to the tune of 5.7 million fewer barrels a day, a 28% year-over-year decline. Oil prices have nearly doubled since the close of 2020 Q1, but at just under $40 a barrel, most oil companies are well below their break-even price to operate existing wells let alone consider drilling new ones especially with oil prices forecasted to remain flat into 2021.