The Economist: Economic outlook for largest Texas metropolitan areas
Our recent long-term forecast calls for moderate growth in the state of Texas exceeding the national pace. The large metropolitan areas will be growth drivers, with activity there spilling out into communities and rural segments across the state.
Here's a quick look at our projections through 2035.
The Austin-Round Rock-San Marcos Metropolitan Statistical Area (MSA) has returned to an expansionary pattern and is expected to remain one of the strongest-performing areas of the nation. The growing population, highly educated workforce, and presence in key growth sectors set the stage for continued economic growth.
The ongoing national recovery will benefit the area's distribution-related industries. Although some technology segments are challenged by intense international competition, the area is also establishing itself in emerging segments in a variety of tech-oriented niches.
From 2010 to 2035, Austin's population is projected to rise by about 1.26 million. Almost 504,000 new jobs are likely over the timeframe, with the services sector adding approximately 306,200 additional workers (60.81 percent of the total). Other important sources of jobs during the 25-year period are the trade and government sectors.
The Dallas-Plano-Irving Metropolitan Division (MD) is also expected to be among the stronger expansionary areas in the United States. Recent signs of life across a spectrum of industries are indicative of building momentum for hiring. Oil and gas exploration and other energy-oriented firms are benefiting from the current high price environment and ongoing development of Texas oil and gas fields, including a modest pickup in the Barnett Shale (which is beginning to become more prominent in the eastern segments of the Metroplex).
The area is a strong generator of economic activity (about 20 of the state total), and is likely to add $389.76 billion in real gross product (RGP or output) and some 1.24 million jobs by 2035. The services sector is forecast to gain approximately 769,000 new workers, with trade contributing another 144,000 jobs and government up by 113,600 jobs.
The Fort Worth-Arlington MD is expected to see moderate long-term growth. Activity in the Barnett Shale is anticipated to continue to serve as an important source of economic stimulus. While the national downturn and weak oil and gas prices slowed exploration activity from 2008 peaks in 2009, recovery began last year. Because only a small fraction of the field's oil and gas reserves have been produced, its economic benefits will be felt for decades to come. The continuing national recovery will also enhance the area's distribution-related industry segment. Though cyclical, aviation-related businesses are likely to contribute to long-term expansion. Over the 2010-35 timeframe, nearly 488,800 new jobs are projected to be added, 58.80 percent of them in services industries.
The El Paso area economy is also forecast to expand at a moderate pace over the long-term horizon. Fort Bliss remains a key driver of economic activity through local purchases of goods and services, jobs and spending by military personnel. Numbers of troops are scheduled to increase notably in the next few years. Trade with Mexico and maquiladoras are expected to be important sources of future growth although cross-border safety is a source of concern.
Through 2035, The Perryman Group's forecast indicates annual growth in output of 3.35 percent, while employment expands by 1.64 percent per annum. The approximately 151,700 new workers anticipated to be added to the El Paso wage and salary employment rolls will be concentrated in the services (79,400), government (34,000) and trade (18,300) sectors.
The Houston-area economy has been on a decidedly upward trend and is expected to continue to demonstrate relatively healthy growth. As rig counts and other measures of activity in the energy sector meet and exceed pre-recession peaks, the region's notable presence in both the upstream (exploration and production) and downstream (refining and petrochemicals) segments are generating strong job gains. Other industries ranging from manufacturing to professional and business services have also seen substantial expansion. The Port of Houston is likely to be a major driver of growth in an increasingly global economy.
Some 1.44 million jobs are expected to be added in the Houston area, with approximately 857,800 in services industries. Other large sources of jobs include 200,900 generated by trade and 127,600 by the government sector.
The San Antonio-New Braunfels area was one of the healthiest cities through the recent recession and is leading the way in recovery. Military and health care continue to be major contributors to economic stability as well as long-term growth. Several other segments (manufacturing, professional and business services, tourism, and others) are additional generators of future economic expansion. Exploration and production activity in the nearby Eagle Ford Shale is yet another stimulus to the area.
The San Antonio area is likely to be a growth leader over a long-term horizon, with approximately 508,000 new wage and salary workers forecast to be added during the 2010 to 2035 period (about 302,000 in the services sector). Other notable sources of jobs include government and trade.
These large MSAs will serve as centers for expansion throughout Texas, and a number of smaller metropolitan areas across the state are also expected to see healthy growth in the decades to come. While business cycles are inevitable, The Perryman Group's latest forecast calls for long-term expansion, with activity in the large cities leading the way.
Dr. M. Ray Perryman is president and chief executive officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.