The Memphis Economy through to November 2020
By David Ciscel
University of Memphis Professor Emeritus of Economics
In February 2020, the regional economy produced 654,200 full- and part-time jobs and an unemployment rate of 4.4%. The COVID-19 pandemic then produced a severe recession.
The regional economy hit bottom in June 2020. It has been recovering since the summer, but by the end of November, the regional economy was still some distance from the economy that existed at the beginning of the year (638,000 jobs now). In addition, the City still has more to recover than the suburbs. Neither the goods sector (mostly manufacturing) nor the service sector has fully recovered from the pandemic recession.
But the good news is that the unemployment rate for the regional economy, which had been 13.1% in July, was down to 6.7% in November. The City had seen its unemployment rate jump to 17.4% in July but, like the regional economy, the City unemployment rate fell to 8.6% in November. The number of workers looking for work and finding work rose dramatically from the low points in June and July. In fact, the labor force in the City is now larger than it was in February. Since the number of jobs has grown more slowly, an important segment of the growth in active workers is in unemployment. And, of course, the best growth for workers is in the suburbs where the local labor economy has basically returned to full employment.
All of this movement in a positive direction may have been halted by the post-Thanksgiving surge in the pandemic. Clearly, the importance of the holiday season to the regional logistics economy was behind the improvement of the job environment through November, significantly improving the job picture from the early Fall. And that economic surge will probably continue through December’s numbers. But the current resurgence of the pandemic will probably make the beginning of the new year difficult for employment again. Like last Spring, the only thing that will blunt the fall in income will be the new Federal stimulus package that Congress passed and that the President finally signed.
There has been considerable speculation of about the changing nature of the economy due the impact of the pandemic. Clearly working and studying from home has increased dramatically. Everyone who has a computer, or a smart phone, now has some familiarity with (and a strong opinion about) Zoom.
But has anything really changed? The answer in Memphis is a clear “no.”
While the data collected on a month-to-month basis are highly aggregated, there seems to be little that has shifted in the Memphis economy. In fact, the service sector (currently 574,600 jobs) has recovered more fully than the goods producing sector (63,400 jobs). Within the service sector, there has not been a big surge in warehouse and transportation jobs. Quite the contrary, this sector has remained fairly stable in employment. Retail trade has remained stable. Only Leisure and Hospitality remains down significantly – and that may be because of health regulations and consumer reluctance to engage in large social gatherings – note that exceptions are so unusual that they are written about in the local press.
So, this whole period may be less important than we imagine. The experience of this Fall is that the economy comes back quickly when the pandemic was perceived to abate. The “V” shaped recovery will happen if and when the pandemic is brought under control. In addition, we will probably get back the same old economy. Unless national minimum wages change dramatically, the regional economy will remain a place where wages are low, benefits from employment are weak, and job tenure for a significant portion of the work force is temporary.
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