The Bureau of Labor Statistics (BLS) just released unemployment rates for Metropolitan Statistical Areas (MSAs) for July 2021, and the College Station – Bryan (CSB) MSA rate fell from 5.0% in June to 4.4% in July. Meanwhile, the state of Texas rate fell from 6.5% to 6.2%, and the national rate fell from 5.9% to 5.4%. (The U.S. rate is available for August as well and came in at 5.2%.)
The accompanying graph shows the path of the unemployment rate for the U.S., Texas, and the CSB MSA from before the Great Recession through the Covid-19 Recession and up to July/August of 2021. At the beginning of the Great Recession, the U.S. unemployment rate was 5.0%, the Texas rate was 4.4%, and the CSB MSA rate was 3.7%. By the end of the Great Recession, the US. unemployment rate was 9.5%, the Texas rate was 8.0%, and the CSB MSA rate was 5.7%.
In the graph, it is clear that the unemployment rate returned to pre-Great-Recession levels rather slowly. In fact, the CSB MSA’s rate did not return to 3.7% until December 2014, a full seven years after the beginning of the Great Recession! Texas was worse, not returning to 4.4% until May 2015, seven years and five months after the start of the Great Recession, and for the U.S., the unemployment rate did not return to 5.0% until September 2015, seven years and nine months after the start of the recession.
This pattern of a slow recovery in the labor market is typical of recessions, although the Great Recession had a longer than usual recovery period.
What does this portend for the Covid-19 Recession? While it took a long time to recover from the Great Recession, the economy continued to perform well after 2015 and indeed right up until the beginning of 2020. At the start of the recession, February 2020, the unemployment rate in the U.S. was 3.5%, the rate in Texas 3.7%, and the rate in CSB 2.7%. These were quite low rates by historical standards. When the Covid-19 Recession struck, it struck with a fury, with unemployment rates jumping in just two months to hit April 2020 values of 14.8% for the nation, 12.9% for Texas, and 9.4% for the CSB MSA.
The initial recovery in the unemployment rate was also sharp, with large declines in these unemployment rates from April to August 2020, followed by slower declines From August 2020 through July/August 2021. As of July 2021, the U.S. rate of 5.4% is well above its February 2020 value of 3.5% at the beginning of the Covid-19 Recession, and above the 5% value for the U.S. at the beginning of the Great Recession. In Texas in July, the value of 6.2% is also well above the level of the Texas unemployment rate at the beginning of the Great Recession, which was 4.4%. Finally, for the CSB MSA, the July unemployment rate of 4.4% is above the 3.7% registered prior to the Great Recession, and certainly above the 2.7% registered just prior to the Covid-19 Recession.
What is the prognosis for the unemployment rate going forward? The Covid-19 Recession is certainly different in any number of ways, with a quick, sharp beginning and, initially, a quick, sharp move along the path to recovery. Furthermore, the unemployment rates prior to the Covid-19 Recession were at or near historical lows, so returning to those levels might be an unreasonable short-term target. But even achieving the unemployment rates we had prior to the Great Recession is still likely to take months, perhaps many months for Texas, although the U.S. is nearing that level, and the CSB MSA may be within striking distance.