Comerica Bank's Texas Index Still Easing

DALLAS, Aug. 28, 2020 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index decreased in June to 106.8. June's index reading was 12 points above the index cyclical low of 95.5. The index averaged 139.1 points for all of 2019, 3.8 points above the average for 2018. May's index reading was 114.2

Our state economic activity indexes for June showed some further deterioration in state economies. This is partially a result of smoothing techniques that we use to process the data. We expect Texas and other states to show positive overall numbers in July and August reflecting states' relaxation of their social mitigation policies. Even as we see stronger Q3 data for the U.S. and most states, we caution against assuming that this is a V-shaped economic recovery. After relaxing some social mitigation policies in late spring, many states experienced an uptick in COVID-19 cases by mid-summer requiring them to tighten policies again. Now with the school year starting, we remain cautious about the potential for increased COVID-19 cases this fall. Also, the demand destruction from the spring shutdowns is still reverberating through the economy. We expect most states, including Texas, to face a lingering high unemployment rate well into next year, and that will be a drag on overall economic activity. In June, two of the nine sub-indexes for Texas were positive. They were house prices and hotel occupancy. The seven negative sub-indexes were nonfarm employment, unemployment insurance claims (inverted), housing starts, industrial electricity demand, rig count, total state trade and state sales tax revenues. Firmer oil prices will help the rig count to stabilize and eventually improve. We expect to see an improving trend by year end.

The Texas Economic Activity Index consists of nine variables, as follows: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, Texas rotary rig count, total trade, hotel occupancy and sales tax revenue. All data are seasonally adjusted. Nominal values have been converted to constant dollar values. Total index levels are expressed in terms of three-month moving averages.

Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Commercial Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $84 billion at June 30, 2020.

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