The Texas economy is performing relatively well compared to the nation as a whole.
While not untouched by the economic difficulties during the past two years, Texas' short-term outlook is encouraging, with continued population growth and overall job growth expected in the near future.
Recovery over the next few years will be led by the larger Texas metropolitan statistical areas, or MSAs, although smaller areas across the state continue to represent important centers of business activity and opportunity. The Perryman Report & Texas Letter provides highlights of the findings of The Perryman Group's 2009-14 short-term forecast for Texas MSAs, as well as larger regions.
Rise in population
Texas has continued to see population gains throughout this past year. In fact, according to Allied Van Lines' Annual Magnet States Report, Texas ranked as the number one destination state for last year, with more individuals moving to the state than anywhere in the U.S. in 2009. Texas is expected to continue to grow both through natural increase as well as immigration into the state. The population is forecast to reach 26.98 million by 2014, up 9.05 percent from 2009 to 2014, higher than the projected 4.74 percent population growth for the nation as a whole over the same time period.
The majority of Texans currently live in areas classified within MSAs. In fact, nearly 88 percent of Texans live within MSAs, with the largest five metro areas containing some 68 percent of the current population. Population increases are projected in all MSAs over the next five years, 2009-14, with the largest five responsible for 76.29 percent of the state's total population gain and the remaining 20 smaller MSAs accountable for another 16.71 percent. With the exception of El Paso, the five largest MSAs in the state are expected to see a compound annual growth rate, or CAGR, for population above that of the state as a whole as are Brownsville-Harlingen, Killeen-Temple-Fort Hood, Laredo, and McAllen-Edinburg-Mission among the smaller MSAs.
Employment growth
The latest annual data indicates that the Texas economy lost roughly 165,600 wage and salary jobs over the November 2008 through November 2009 time frame, reflecting an annual decline of 1.1 percent. October and November data indicate job growth, though December saw some job losses. It will likely be several months before Texas is able to sustain job expansion, but the outlook for the state shows an addition of some 1.25 million new jobs from 2009 to 2014.
Like population, jobs in Texas are presently concentrated in major metro areas (70.77 percent of wage and salary employment). Smaller MSAs contain 19.62 percent of wage and salary employment. Moreover, the five largest MSAs are forecast to be responsible for 72.52 percent of the jobs added across the state from 2009 to 2014. In particular, the Dallas-Plano-Irving Metropolitan Division and the Fort Worth-Arlington MD are projected to account for 28.79 percent of the growth along with the Houston-Sugar Land-Baytown MSA responsible for another 24.27 percent.
The Austin-Round Rock MSA is likely to experience the fastest employment CAGR over the short term at 2.42 percent. McAllen-Edinburg-Mission and Midland are expected to see employment CAGRs of over 2.30 percent.
Output gains
From 2009 to 2014, Texas is forecast to experience growth in output (as measured by real gross product.) The per-annum output expansion rate for Texas is projected to be 4.71 percent, with annual growth rates ranging from 4.41 percent for El Paso to 4.92 percent for Austin-Round Rock for the major metropolitan areas. Additionally, four of the five major MSAs are likely to outperform the state in per-annum expansion of RGP, as are five of the smaller 20 MSAs. In particular, Midland is expected to see the highest per-annum output expansion rate out of all MSAs at 5.53 percent, while Killeen-Temple-Fort Hood is forecast to expand at the lowest CAGR, 3.96 percent, although still modest. Houston-Sugar Land-Baytown is projected to be the largest contributor to the overall Texas RGP during the next five years, generating 31.29 percent of the total Texas output gain.
Real personal income (RPI -- by place of residence) in the state is projected to grow by 5.09 percent annually from 2009-14. The 25 metro areas are likely to be responsible for 91.14 percent of the state's gain in RPI over the short term, with the five major MSAs contributing 75.38 percent.
The Houston-Sugar Land-Baytown MSA is expected to achieve the largest expansion in income increasing from $224.73 billion in 2009 to $289.67 billion in 2014. This growth pace of 5.21 percent is higher than that of the state as a whole, but not as high as several smaller MSAs across the state. The annual expansion rates for other MSAs are forecast to range between 4.81 percent (Lubbock) and 5.41 percent (Killeen-Temple-Fort Hood). Real personal income CAGRs during the short term for the remaining metros are estimated at: Abilene (4.92 percent); Amarillo (4.86 percent); Austin-Round Rock (5.11 percent); Beaumont-Port Arthur (5.01 percent); Brownsville-Harlingen (5.04 percent); College Station-Bryan (4.98 percent); Corpus Christi (4.97 percent); Dallas-Plano-Irving (5.07 percent); El Paso (4.97 percent); Fort Worth-Arlington (5.07 percent); Laredo (5.35 percent); Longview (5.21 percent); McAllen-Edinburg-Mission (5.32 percent); Midland (5.33 percent); Odessa (5.21 percent); San Angelo (4.86 percent); San Antonio (5.08 percent); Sherman-Denison (4.86 percent); Texarkana (4.83 percent); Tyler (4.93 percent); Victoria (4.82 percent); Waco (4.92 percent); and Wichita Falls (4.91 percent ).
Texas as a whole is likely to see a per-annum growth rate of 8.82 percent in retail sales over the 2009-14 timeframe. (Following convention, retail sales are reported in nominal terms, meaning that they are not adjusted for inflation. In addition, some of the historical values for retail sales have discontinuities due to inconsistent data sources and measurement approaches in the available information.) Of the large metros, Dallas-Plano-Irving and Houston-Sugar Land-Baytown are projected to experience a CAGR above that of the state (8.95 percent and 8.98 percent, respectively) during the same time period. The remaining large metros' anticipated retail sales growth rates are: Austin-Round Rock (8.75 percent); Fort Worth-Arlington (8.79 percent); El Paso (8.72 percent); and San Antonio (8.70 percent).
Concerning the smaller MSAs, six are expected to achieve retail sales per-annum growth rates above that of the entire state, with five of those growth rates over 9.00 percent : Killeen-Temple-Fort Hood (9.08 percent); Laredo (9.10 percent); Longview (9.03 percent); McAllen-Edinburg-Mission (9.13 percent); and Midland (9.16 percent). Odessa is anticipated to have a retail sales CAGR of 8.92 percent. While not higher than the state as a whole, the remaining smaller MSAs are all predicted to experience retail sales CAGRs exceeding 8.40 percent.
Texas regions
Short-term forecasts on a regional basis allow for comparisons of broader geographic areas across Texas. The following information presents the economic outlook for the 13 economic regions encompassing the entire state.
Expansion over the 2009-14 time period is likely for all regions in the Lone Star State. The greatest population growth is projected to occur in the Metroplex, which is likely to gain 660,585 people -- 29.5 percent of the total increase forecast for Texas over the five-year timeframe. The Gulf Coast is expected to see the second-largest increase in population, 584,763 and be responsible for 26.11 percent of total state population growth. The Capital Region is anticipated to be the fastest-growing region from 2009 to 2014, with a per-annum expansion rate of 2.69 percent. The South Texas Border is the only other region forecast to achieve a population CAGR of more than 2 percent at 2.1 percent.
Similar to population growth, the Metroplex and the Gulf Coast are projected to make major contributions to wage and salary employment growth from 2009 to 2014, both increasing by more than 300,000 jobs and representing 29.90 percent and 24.61 percent , respectively, of the growth in Texas in the short term. The fastest per-annum growth in employment is likely to occur in the Capital Region which is anticipated to experience an employment CAGR of 2.42 percent and an overall employment gain of 12.68 percent through the five-year timeframe.
Over half of the state's projected $243.9 billion increase in output, real gross product, from 2009 to 2014 is expected to be generated by just two regions: the Metroplex, 35.2 percent and Gulf Coast 30.89 percent. Real gross product CAGRs for the two regions are 4.75 percent and 4.82 percent, respectively. The remaining eleven regions have per-annum growth rates ranging from 4.23 percent in Central Texas to 4.95 percent in West Texas.
Retail sales and real personal income growth follow similar patterns as the other economic key indicators with all regions experiencing expansion over the 2009-14 outlook. The Metroplex and the Gulf Coast regions are both likely to represent the largest growth in both retail sales and real personal income during the short term.
Although the recent downturn has certainly slowed economic expansion in most parts of the state, cities across Texas are expected to see a return to growth over the next five years. The largest cities will generate a substantial percent age of gains in output, jobs, population, and income. However, smaller metro areas are also forecast to see increases in jobs and opportunities.
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