Billy Benedict, who owns J&J Spirits in East Austin, is worried about the economic uncertainty brought on by the COVID-19 outbreak. Jordan Vonderhaar for The Texas Tribune
Mikel Bruce was up to his neck in soot Thursday, unsure what was next. A Montgomery County resident had just tested positive for the new coronavirus, and officials there feared the COVID-19 disease had reached the point of community spread.
A self-employed contractor with three children at home in bordering New Waverly, Bruce had already seen a dip in work. His theory: Texans fearing an epidemic-spurred economic downturn were being financially cautious. That's meant fewer plumbing jobs at the trailer homes in his small town and fewer home remodels in his county north of Houston.
On Thursday, at least, Bruce had a drywall job.
“But I’m worried,” he said in a telephone interview. “Everybody is, because we really don’t know that much about this virus. Then there’s the thing about how we have a man in the county diagnosed and this community spread they’re talking about.”
Economists say it's too soon to tell the full financial impact the virus will have on individual Texans, on regions with higher concentrations of the virus or on the state economy as a whole. Already, oil and gas prices have plummeted, shaking the state's largest industry. The Houston Livestock Show and Rodeo, that city's largest annual event, halted operations. Conferences scheduled in Galveston and Corpus Christi have pulled out. And local officials in Austin canceled the city's premier event, South by Southwest, sending industries and businesses there into disarray.
But countless Texans like Bruce have already started to feel the pinch. And as travel restrictions, major event cancellations and unprecedented school district closures mounted across the state this week, it's become clear that Texans may just now be on the front end of major disruptions to their daily lives, which could rattle individual finances even further.
Billy Benedict, owner of J&J Spirits in east Austin, said he relies on a big boost from the South by Southwest crowds every year. So does the city: The 2019 festival’s impact on the Austin economy reached $356 million, according to the consulting agency Greyhill Advisors. In March 2019, festival attendees booked more than 55,300 hotel room nights, generating $1.9 million in city hotel taxes for the month, according to Greyhill.
“It’s just as important as Halloween and the holiday season,” Benedict said of the festival, which was canceled for the first time in 34 years.
Despite a drop in business, Benedict sought some levity with a sign outside the store in hopes of drawing customers.
“Virus, virus go away, 15 days until opening day,” it read early in the week, referring to the beginning of Major League Baseball’s season. But on Thursday, the league postponed opening day. Even light humor has been upended by COVID-19, and Benedict was bummed.
“As an American, baseball’s the fabric,” Benedict said Thursday. “And that makes this whole thing super scary.”
Ray Perryman, an economist in Waco, said uncertainty could plague business in Texas across several sectors, and the effects beyond oil prices cratering have already begun: Supply chains have bottlenecked, and the tourism and travel industries are taking hits just as the bustling spring break season is set to begin.
The virus' outbreak in the Houston area, the state's hardest-hit region, started with 12 people who were exposed during cruises in Egypt. Hundreds of people who have been quarantined at San Antonio's Lackland Air Force Base — where the state's first positive cases occurred — were passengers on other contaminated cruise ships.
No commercial cruise passing through Galveston has canceled or issued reports of the virus aboard a vessel at the port there, but the city has seen four conferences pull out in the wake of the outbreak.
“Until people have a sense of the ultimate magnitude of the situation, they are going to be reluctant to spend discretionary funds,” Perryman wrote in an email.
As medical experts and health officials began advising people to avoid crowded public places and limit travel, Peter Rodriguez, dean of the Jesse H. Jones Graduate School of Business at Rice University, noticed companies and individuals had already begun to change. And that was before his university on Thursday canceled in-person classes for the rest of the semester and asked students to move out of their dorms.
“Everyone has been pulling back from all sorts of events and reducing planned expenditures,” Rodriguez said. “Things that we would’ve done normally, we’re not doing."
Even communities outside areas of outbreak are seeing more people stay home. Steven Startz in New Braunfels, who opened Le Citron European Cafe Bistro there in November, expected a bump in business from tourists in February and March. Instead, revenue is down 60%.
"That all coincided with the start of the coronavirus in the United States," he said.
Startz has cut staff hours “tremendously” and hasn't replaced the five employees he's lost in recent months. He’s also trying to push catering and delivery options, which he thinks may reach more customers who may prefer to stay home amid fears of the virus.
The restaurant has no rainy day fund; plans to maintain one evaporated a week after the restaurant opened, when an oven broke and had to be replaced immediately.
"Things like that pop up — what do you do?" Startz said. "You rob from Peter to pay Paul — you pray that business is good enough to absorb it."
And until the virus and fear of it began to spread in the United States, he said, "it was."
Back in Austin, Samantha Staples has already felt the squeeze, too. As president of High Beam Events, her company signed more than 20 contracts with various vendors for South by Southwest.
“My company has one revenue stream,” Staples said. “It’s called events.”
High Beam Events is “getting by,” Staples said, and she is trying not to make any staffing cuts. But the festival “is our biggest money maker.”
She's worried the entire industry is about to take a massive hit.
“There’s so much uncertainty right now on group gatherings, I just think it’s going to be a very lean period for the next six to nine months," Staples said.
Emma Platoff contributed to this report.
Disclosure: Rice University and South by Southwest have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.