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Texas Metropolitan Economies Growing but Reaching Capacity

In June employment in the San Antonio metropolitan economy grew 2.22% compared to June of last year. The growth in the region trailed the growth in Dallas, the fastest growing region in June, Fort Worth, Austin, and Texas. All of the metro areas with the exception of Houston and the state continue to see growth rates that exceed the national rate of growth in employment.

Employment Growth June 2017

The trend in growth rates is shown in the following chart and provides some insights into what is happening in these economies. The year-over-year growth rates cover the period since June 2009 (the trough of the Great Recession) to June 2017. It is very clear that while Houston’s employment growth has not quite yet recovered to the level of the other major metro areas in the state, the economy is well into a recovery driven, at least in part, by the increase in oil prices. Fort Worth has also seen nice increases in growth rates, also probably in response to rising oil prices. These increase have also pushed up the growth rate in the state. However, growth rates in San Antonio, Austin, El Paso, and Dallas appear to be on a downward trend. Since January of this year, employment growth in the San Antonio economy dipped below its historical average growth rate of 2.42%. All of these economies are probably seeing slower growth because they have reached, or are very close to, their full-employment levels. I suspect we also see similar trends in Houston, Fort Worth, and across the state over the next year or two. This means that growth is going to be driven by increases in population (more specifically, the labor force) and gains in productivity. While projections are for increasing population of approximately 2% across the state into the foreseeable future (more on this in a future post), overall demographic trends will likely constrain labor force growth. This leaves productivity gains as possibly the main driver of economic growth over the next few years.

Employment Growth Trends June 2017

Steve

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Cost-Benefit Analysis of Excel Beyond the Bell San Antonio Partner Agencies

I had the honor to speak yesterday at the Excel Beyond the Bell San Antonio Annual Summit on the results of a study I did with Eddie Molina on the net benefits or return on investment that this network of out-of-school time agencies contribute to the local community. In short, for every dollar invested in these programs, the valuable services they provide to the youth of San Antonio returns $3.66 in benefits to the community.

These agencies serve 55,000 youth, which is a staggering number in and of itself, and they make a profound impact on many of these kids’ lives. Additionally, while this study did not look directly at their potential impact on economic development, these programs are vital to the future development of San Antonio’s economy, since they are playing such a big role in developing the future workforce and enhancing the quality of life of the community.

The slides I used for my speech can be found here, and the full report can be found here.

Steve

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Economic Scholars Program

I was fortunate enough to be able to attend the Economic Scholars Program at the Federal Reserve Bank of Dallas a couple of weeks ago. It was such a wonderful conference that I felt compelled to post something on the blog about it.

The really cool thing about the conference is that it is run entirely by undergraduate students. This means that the students review the papers for acceptance into the conference, present their research in the sessions, serve as discussants of the papers, and chair each of the sessions. Of course, there are faculty in attendance, but we were there as much for moral support as anything (and also because of the small detail that our universities and colleges required a faculty member to attend with their respective students). The faculty would ask some questions, but probably 95% or more of the questions came from students. And the questions they asked were outstanding, as were the responses to their questions.

Since coming back to St. Mary’s University where I teach, I have told my students that this was the best academic conference I have attended. I have certainly been to professional conferences where the quality of some of the papers was not nearly as high, the discussants were not nearly as prepared, and it was not run as well as this one was.

I should also mention that there was also a poster session that was very highly attended. They served food during the session, so when I walked into the room, I expected to see most of the students hovering around the food because what college students doesn’t want to indulge in good food (and the food at the Fed is always exceptional). However, I saw just the opposite. The students surely ate well, but they were all engaged around the various posters talking about the research that was being presented. They were very, very engaged.  As a professor, it was awesome to observe.

It was such a great experience for the students, and if you are a college professor in economics or other social sciences, I would highly encourage you to consider taking your students to this conference.

The conference is co-hosted by the Federal Reserve Bank of Dallas and Austin College – my alma mater (he states with great pride). The hospitality provided by the Fed staff was amazing. I greatly appreciate all of the effort that the Fed staff and faculty at Austin College put forth to organize and host this conference.

On a personal note, the faculty member from Austin College who was responsible for their part of the organization effort, Danny Nuckols, was my mentor and main economics professor when I was at AC. It was his passion, keen insights, and encouragement, along with being one of the best professors I have ever had, that lead me to follow in his footsteps and become an economics professor.

As always, it was great to see him, but to add to that, I also got to meet two more of his former students who also went onto to become economics professors. One is at the University of Texas at Arlington and the other one is at the University of North Carolina at Greensboro. It is common for great coaches to develop a coaching “tree” as their assistant coaches branch off to assume head coaching positions at other teams. I guess the same is true with great professors like Danny Nuckols.

Pic of Faculty 2
Danny Nuckols, (second from left) and three branches of his professor tree. 

Economic Growth by Presidential Administration

A couple of weeks ago I gave a speech in which I anticipated that the audience would like to have some discussion about the potential economic effects of the upcoming presidential election in the U.S.

To support the discussion, I worked with one of our economics students at St. Mary’s  University to create a chart showing the growth in gross domestic product for the U.S. by presidential administration.

growth-by-presidential-administration

As shown in the graph, GDP growth during Democratic administrations averaged 4.13% and during the Republican administrations, growth averaged 1.77% if you include the Great Depression and 2.72% if you do not include the Great Depression. Without going into more in-depth analysis, it is difficult to make too much of these numbers. I do not think it is correct to just attribute strong or weak growth only to the policies passed during any of these administrations. They can certainly have effects on the economy during their times in office, but the strength or weakness of the economy during most presidential administrations is often due to some extent to the policies implemented well before a president takes office.

For example, some of President Hoover’s policies certainly made the Great Depression worse, but I do not think one can attribute the entire Depression to him. President Roosevelt was the beneficiary of the growth after the Great Depression, the massive amount of spending during World War II, and the fact that he was in office for twelve years. President Obama took office as the economy was at or near the depths of the Great Recession, the cause of which I would attribute to policies implemented by Presidents Reagan, Clinton and Bush 43.

There are other studies that go into more depth on growth during the presidential administrations that I may write about in future blog posts. As previously mentioned, while it is difficult to say much about growth during specific presidential administrations based only on the data presented in this chart, there is one fact worth noting. I hear quite a bit that the economy slows or even goes into recession during Democratic administrations, but as shown in the graph, that is clearly not the case.

In fact, it is just the opposite.

 

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Growth Slowing in Texas and Its Major Metropolitan Economies

I recently gave a speech to the Rotary Club of Seguin titled, “Past, Present, and Future of the Central Texas Economy,” in which I discussed the current economic situation in Texas and across the major metropolitan economies in the state. Growth across the state and in these metropolitan economies has been slowing this year, as expected, but over the past few months, the rates of growth have dipped below long-term trends for San Antonio and below growth rates for the U.S. and even below 1% growth year-over-year in some of the other areas (See chart below). With employment growth of 2.55% in August, Dallas leads the way.

august-2016-employment-growth

There are several factors that play into this. Houston has seen its economy fall into recession since the decline in oil prices, and as the state’s largest metropolitan economy, this downturn ripples through other local economies. Another big factor is that labor markets in these economies are very tight, and there just might not be enough labor to fuel the continued growth we have seen over the past few years. I believe this is especially acute in Austin but could also be playing an important role in San Antonio and other areas.

Additionally, slowing growth around the globe and the continued strength of the dollar have certainly negatively impacted exports, and I can’t help but wonder if uncertainty around the U.S. presidential election has caused at least a bit of the slowdown. I still need to assess the prospects for 2017, but I want to see the results of the presidential election. Regardless of that result, though, it seems likely that some of these headwinds will continue into next year.

If you’d like to see the presentation, it can be downloaded here.

Steve

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Accounting for the Ocean Economy

The oceans are an important part of any economy, even those economies that are landlocked. The obvious importance comes from the food and entertainment options the oceans provide, but the oceans also provide invaluable environmental and ecosystem services that certainly have profound economic effects. Maintaining healthy oceans that are sustainable for future generations is vital for continued economic success, but accurately accounting for the ocean or “blue” economy is vital to accomplishing this. The immediacy of achieving this accurate measurement of the ocean economy, including the environmental and ecosystem services the oceans provide, must also be recognized as the effects of climate change are upon us. If we don’t create these measures as accurately and completely as possible, I don’t see how we can fully understand the economic importance of the oceans and move forward with policies and initiatives that will improve their health and sustainability.

This is why I think the special edition recently published by the Journal of Ocean and Coastal Economics is so important. The journal is published by the Center for the Blue Economy at the Middlebury Institute of International Studies at Monterey, California. This special edition, titled Oceans and National Income Accounts: An International Perspective, is a publication of the papers presented at a meeting hosted by the Center for the Blue Economy in October 2015 “to explore ways in which the economic values of oceans and marine resources can be incorporated into national income accounts.”¹

If you are reading this blog, you obviously have an interest in economics, and I highly recommend you read this special edition because if you truly want to understand how the economy functions, you have to understand how it is measured, or not measured. This is especially true for the oceans and the important contributions they make to all economies. As you get into the articles, you will get a deeper understanding of these contributions and the complexities involved in measuring them. It may not seem like the most interesting reading, but given your interest in economics, I think you will find it more engaging than you might think after you start reading the article. The Center for the Blue Economy is a leader in conducting research on the blue economy, disseminating that information through this journal, conferences, and other means, educating future researchers, and raising awareness about the importance of the blue economy, so I also encourage you to follow their other activities. Their website is a treasure trove of information.

Enjoy.

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¹Colgan, Charles S. (2016) “Introduction to Special Edition: The Oceans and National Income Accounts: An International Perspective,” Journal of Ocean and Coastal Economics: Vol. 2, Article 1.

San Antonio Economic Forecast Update

I recently presented an update to my 2016 forecast for the San Antonio economy.

Please find the full presentation slides here.

In short, the growth in the San Antonio economy has slowed this year as anticipated. As shown in the following two graphs, through July, employment had grown 2.15% compared to July of 2015 and unemployment was at 2.8% (seasonally adjusted). My forecast for San Antonio this year was for employment growth between 2.25-2.75% and an unemployment rate in the range of 3.5-3.7%. While the July figures are slightly outside these ranges, I am leaving my forecast as is with the recognition that employment growth may end the year a bit lower than 2.25% and unemployment may come in at a rate slightly above 3.7%.

Unemployment rate as of July 2016Employment growth through July 2016

Please feel free to contact me with any questions regarding the report.

Steve

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