Coronavirus strikes Fort Worth’s economic engine. How long until we recover?
Business and government leaders often refer to DFW Airport as the economic engine that drives Dallas-Fort Worth.
And right now, because of the coronavirus, that engine is sputtering.
Economists interviewed for this story say the United States may be headed for an economic recession. North Texas is particularly vulnerable because of a large number of aviation-related jobs and an enormous consumer base that at the moment can’t spend its money because so many businesses are closed.
“A recession is a near-certainty for the U.S. economy and Texas as well, given the tremendous amount of supply chain disruption and demand disruption we’ve already seen,” Robert Dye, Dallas-based senior vice president and chief economist at Comerica Bank, said in an interview. “My expectation is we’re going to be fighting this and getting the economy in shape for the remainder of the year. If we’re lucky, we’ll feel better by the fourth quarter.”
The coronavirus disease, also named COVID-19, has brought aviation and travel-related commerce to a halt — in the skies, and on the ground. The hallways and parking lots at DFW Airport’s passenger terminals — which just a couple of weeks ago were packed with routine traffic — now resemble ghost towns.
But the downturn in aviation and commercial air travel is just part of the story. Other North Texas industries such as construction, oil and gas, retail and restaurants, also face months if not years of recovery.
Throughout the Metroplex, hotels are empty, restaurants are shuttered and bars and music venues are quiet. In Texas, 64,072 hotel employees have lost their jobs because of the coronavirus — about 44% of that industry’s work force, according to the American Hotel And Lodging Association.
General Motors’ Arlington assembly plant, where 4,500 workers make Cadillac Escalades, Chevy Tahoes and GMC Yukons, has closed its doors.
Some businesses — especially smaller, locally-owned entities — might never recover. For others, it could take months or even years for things to seem normal again.
But overall, economists say they expect the Fort Worth-area economy eventually will make a full recovery.
“It will be lean times for the airlines and airport employees and the many businesses that serve them,” Ken Simonson, chief economist for the Association of General Contractors, said in an interview. “I think it’s going to take into next year before air travel recovers.”
Although many economists say the United States is heading for a recession, others say it might not get to that. They are optimistic that the downturn will be over by summer.
“This is going to be rough, but it should be short,” Pai Orrenius, vice president and senior economist at the Federal Reserve Bank of Dallas, said in an interview.
Orrenius said the energy sector faces a rough road to recovery, but aviation, exporting, retail and other industries are fundamentally strong and should recover quickly once the coronavirus is under control.
“We should be able to bounce back,” she said. “We’re hopeful by the third quarter we will be growing again, (and that) this will not last through the end of the year. But that depends upon how the outbreak progresses.”
DFW Airport: Economic engine
Fort Worth-based American Airlines is the largest employer in North Texas, accounting for nearly 33,000 jobs in the Dallas-Fort Worth region. The airline has suspended most international flights and cut nearly a third of domestic flights, offering tens of thousands of employees financial incentives to retire or take a leave of absence.
American’s home airfield, DFW Airport, is perennially ranked among the top 10 busiest airports in the world. DFW provides the region with about 228,000 jobs per year, including vocations directly tied to the airport as well as indirect employment such as aviation-related services and construction, according to a 2015 economic study by The Perryman Group.
President Donald Trump and members of Congress have already publicly stated their desire to take steps that would save the airlines from financial disaster.
Despite the Dallas-Fort Worth region’s strong ties to commercial air travel, Ray Perryman, a Waco-based economist and president of The Perryman Group, said the the impact on aviation and related industries is temporary.
Other industries such as construction, and retail and restaurant services may be hit harder than aviation, Perryman said.
“The businesses facing the biggest immediate challenges will be those relying on large numbers of in-person customers (such as restaurants and retail stores) and firms without extensive capital they can tap into to help them through this period of time,” Perryman said in an email.
Fort Worth’s oil and gas sector also is being hit particularly hard, Perryman said. But he said the expansion of goods movement businesses at Alliance Airport has helped diversify the local economy, which should help ease the pain of an oil and gas downturn.
Fear of a recession may be as big of a problem as the prospect of a recession itself, Perryman said.
“In an economy where 70% of activity is driven by consumer spending during normal times, one of the worst things that can happen is for people to stop spending,” he said. “It can become self-fulfilling and self-perpetuating to some extent, worsening the disruptions across the economy.”
Fort Worth’s massive housing boom, with the cost of single-family homes increasing 58% during the past seven years, also could experience a significant cooling off as fewer people move to the area, several economists said. Prices of newly built homes, which have increased nearly every year for a decade, could level off.
Where are the customers?
Evidence of economic pain is already all over Fort Worth.
On Friday, many small businesses in west Fort Worth remained open, but with few customers.
One exception was at Salon West on Camp Bowie Boulevard, where store manager Nicki Castillo and her colleagues used a digital thermometer to check the temperatures of customers before allowing them past the front door.
“We’re cleaner than a hospital,” she quipped.
Castillo had nearly a full house on Friday, with many customers coming in to have their hair, makeup and nails styled. But Castillo was concerned about what business will be like next week, when her store has few appointments scheduled.
She said she was worried about her stylists, who are self-employed and for the most part don’t have a way to make up for lost wages if the customers don’t show up.
A few doors down at the Not Just Soccer sporting goods store, store manager Eric Stein said Friday was the first day he was working behind the cash register by himself. He and two other full-time workers at the store, which is locally owned by a family that also runs a store in Dallas, were reducing and staggering their hours in response to declining sales the past two weeks.
The store also typically employs four to five part-time workers, often teenagers or young adults in the neighborhood.
The store’s bread and butter is selling uniforms, athletic gear and other supplies to youth baseball, soccer, volleyball and other sports teams, as well as organizations associated with the Fort Worth school district, which has suspended all official classroom and extracurricular activities until at least April 3.
Stein said he is guardedly optimistic that his store can weather the financial storm, even if it lasts into the summer.
“If things turn around by August, then we’ll be just dandy,” Stein said. “But if this goes on past August, it could be devastating.”
Staff writer Luke Ranker contributed to this report.
This story was originally published March 22, 2020 at 5:00 AM.
