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Welcome to The Regional Outlook Texas, an analysis and forecast for two of the state’s largest regional economies. Each quarter, find updated data that goes beyond the state and national level to deliver a current snapshot of employment, home prices, consumer spending, personal income, and other leading economic indicators within key areas of the state. Visit your region of interest and subscribe for email delivery.
Like most other major metro regions, Dallas has suffered from miserable labor market numbers as a result of the pandemic-born recession. However, relative to other cities across the state and country, Dallas has fared well over the last year, providing yet more optimism for another great expansion. With new cases of the coronavirus plummeting, while vaccinations continue to rise, the government has eased business restrictions signaling a resurgence in economic activity that will accelerate as the year advances and the vaccination roll-out gathers pace. Even so, small businesses in the Dallas region continue to feel the pain of economic fallout.
Dallas Labor Market Continues To Improve But Hospitality Struggles
Due to the coronavirus outbreak, and the government response to it, the greater Dallas area sustained significant damage in March and April of 2020 with roughly 244,000 payroll jobs lost across the region. This equates to 8.9% of jobs in the Dallas-Plano-Irving region – a serious shock to the labor market, but relatively less serious when compared to other metro regions across the country. By the end of 2020, only around 179,000 jobs that were lost had returned, representing around 69% of all jobs lost since the start of the pandemic. This means, relative to pre-pandemic levels, there are still roughly 2.7% fewer jobs across the greater Dallas region than there were prior to the pandemic. The region’s labor market fared a little better than the state, where payroll employment is 3.9% lower than pre-pandemic levels. Unemployment in the Dallas region is 6.6%, down from a 13.0% peak in April 2020, but still higher than its 3.1% pre-pandemic level. This is higher than Austin-Round Rock (5.4%), but lower than Houston-The Woodlands-Sugar Land (8.3%), Fort Worth-Arlington (6.8%), and the state overall (7.2%).
At the industry level, the largest gains in December took place in the Professional/Business sector, which added 8,400 jobs. This was followed by Retail Trade, which added over 5,600 jobs, and Wholesale Trade, which added about 1,300 jobs. In terms of employment numbers relative to February, the industry that recovered best in the greater Dallas region was Finance and Insurance, which reported job levels at 103% of February 2020 levels. Meanwhile, the Arts and Entertainment sector has the worst recovery figures, with jobs standing at 29% below pre-pandemic levels. Accommodation and Food is the second worst, with payroll employment numbers at 19% below pre-pandemic levels. The losses in Accommodation and Food still account for a whopping 63% of all job losses in the greater Dallas region since the onset of the pandemic, an indication of just how essential the recovery of this industry is to the recovery of the region as a whole.
Dallas Hospitality Small Businesses Struggle To Reach Pre-Pandemic Levels
Midway through the first quarter of 2021, the Dallas region is one of the best-recovered metros in Texas in terms of small business reopenings. The latest data provided by Opportunity Insights’ Economic Tracker suggests that the current level of open small businesses stands at 26.7% below pre-pandemic levels. (Note: ‘small business’ here is defined as those with annual revenues and/or employees below thresholds set by the Small Business Administration. These vary across industries.) This might seem like a major blow, but it is actually a positive number in relation to other major metro areas in the state. Houston and Austin, for instance, reported levels in February 2021 that were 34% and 38% lower, respectively than January 2020 levels. The greater Dallas area has also performed better than the state, where the number of small businesses open hovers around 33% less than pre-pandemic levels.
Of course, the surge in coronavirus cases at the end of 2020 affected different industries at different rates. Across the broader Dallas region, the Leisure and Hospitality sector continues to struggle the most, with a roughly 50% drop in open small businesses compared to January 2020. This is slightly better than Texas as a whole, which has seen a 54% drop in open Leisure and Hospitality small businesses relative to a year ago.
The Transportation sector remains the best-performing sector in Dallas, with the latest data indicating only a 19% drop in open small businesses compared to a year ago. Open small businesses in Professional/Business are down 26% from a year ago, while Education and Health services are down 30%.
In terms of revenue, small businesses in the Leisure and Hospitality industry have seen the most substantial fallout since the outbreak of the pandemic. At the beginning of June, revenue for Leisure and Hospitality hovered around 45% less than pre-pandemic levels. Midway through December 2020, revenues had plummeted to 73% less than pre-pandemic levels. The situation has improved slightly since then, with the latest data indicating revenues at 68% less than pre-pandemic levels. But as of February 2021, no other industry comes close to this level of revenue loss. Revenues in Transportation are around 33% less than pre-pandemic levels, while those in Professional Services and Education and Health Services are 28% and 22% less than pre-pandemic levels respectively.