TYLER, Texas — The national unemployment rate fell to 8.4% last month. While the number of people out of work keeps falling, critics are worried that the economic recovery is slowing down.
Dr. Harold Doty, a professor of management at UT Tyler, is not among them.
“The jobs report was good news,” Dr. Doty said. “Any time you have 1.4 million people more working, that’s a good thing.”
The latest jobs report from the Bureau of Labor Statistics showed that employers added approximately 1.4 million jobs in August, compared to 1.8 million jobs added in July and 4.8 million in June. Doty said the economic recovery is not as fast as most people would like, but he believes it is sustainable.
“You need to remember that, as the number of lots jobs goes down, the percentage that we’re recovering actually goes up faster,” Doty explained. “When you have 22 million jobs to make up, you’re gonna replace them a lot faster than when you only have 11 (million), so we would expect that growth rate to slow down.”
That is not to say Professor Doty looks at the economy through rose-colored glasses. He pointed to the fact that, while temporary layoffs have gone down, the number of permanent job losses actually went up in August.
“What we see is that, while many of the layoffs were temporary, as the economy hasn’t picked up as rapidly as some people might hope and some government subsidies have declined, we’re seeing that some of those job losses that were initially reported as temporary have no become permanent," Doty explained. "And that’s troubling for all of us.”
Doty believes a further decline in COVID-19 cases will help the economy, as well.
“As the number of cases goes down, as the positivity rate goes down, we will start to open up more and more of the economy," Doty said. "At some point, we’re going to open bars and restaurants again. So, as cases go down and we reopen, yes, I think things will get better; yes, we’ll continue to create jobs; and, yes, unemployment will continue to go down.”
He said he worries, however, about a potential increase in COVID-19 cases in the near future. Memorial Day, Independence Day, and the return of college students to campuses have been causes of spikes in the number of people testing positive.
“And then we’re going to have the biggest weekend of the summer, Labor Day, where we’re all going to go out and about” Doty mentioned. "We’re going to send kids home from college, we’re all going to have small groups and barbecues in the back yard. So, I think that we could have a difficult surprise coming for us mid-to-late-September. I hope not. I certainly hope not.”
Doty said getting the local economy fixed will require higher fuel prices because of the importance of the energy industry in East Texas. Gas prices will rise if demand increases, which would mean people are traveling again, so we’ll have to stop the virus to jump-start the economy.
“I think the most important thing that will predict a big uptick in our economy, and our jobs numbers, and everything is how quickly a vaccine is made available,” Doty stated. “And it needs to be slowed down to make sure it’s a safe vaccine—and then, how quickly is it administered? And when that happens, I think we’ll go back to normal.”
The unemployment rate in Tyler is generally better than the national average, but it will be another two weeks before the Federal Reserve Bank of Dallas releases the latest data.
While Doty is generally optimistic about the state of the economy, noting how strong it was before the pandemic began, he does not expect it to operate normally for some time.
“There are also some major hits still to be taken,” Doty explained. “So, for example, I think one of the airlines—American Airlines, I believe—said it’s going to lay off [19,000] people. Coca-Cola is going to lay off thousands of people. Those are good jobs that are gonna be gone, probably for the foreseeable future.
“The next thing we’re gonna have to start to deal with, at some point: the government’s done a great job of providing stimulus to our economy,” Doty added. “Unfortunately, that’s been done with debt, and at some point, we’re going to have to start paying the debt back, and that’s never as much fun as spending the money the first time around.”