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Mexican Nationals Spending in El Paso

I recently spoke at the International Conference of Shopping Centers West Texas Idea Exchange conference. Here is the presentation: Presentation on Mexican Nationals Impact to ICSC 4-22-15. Of the twenty counties included in this study, El Paso received the highest amount of spending by Mexican Nationals in 2012 at almost $446 million. Our estimate is that the largest amount of money is spent on clothing at about $205 million.

On a side note, I was very impressed with the accomplishments El Paso has made in its economic development and its approach for future development. This includes an awesome new baseball park in their downtown and renovations to a new theater and improvements/additions to other arts facilities in their center city. They also have much more to come with some exciting mixed use projects downtown and in other parts of the city, as well as a streetcar serving the downtown area that will be installed in the neat future. I know the recent economic numbers don’t necessarily show it, but from my quick “on the street” view of the city, they are moving in the right direction.

Forecast for Texas and San Antonio Economies in 2015

I released my 2015 economic forecast for the San Antonio economy yesterday. I am projecting employment growth in the range 2.25-3.0% and a reduction in the unemployment rate to 3.4-3.8%. The employment growth forecast is down a bit from the growth San Antonio experienced in 2014 at 3.26%, but it is still a healthy growth rate for San Antonio and will continue to push unemployment down from its December rate at 3.9%. Keith Phillips, senior economist at the Federal Reserve Bank of Dallas, projects employment growth for Texas to be in the range of 1.0-2.0% in 2015. Employment across the state grew at a rate of 3.23% in 2014, so while it is projected that the state will continue to see growth, it is a fairly sizable reduction.

The reductions in projected growth rates for 2015 are mainly due to the impacts on the Texas and San Antonio economies, but the divergence in the size of the decreases in the growth rates between Texas and San Antonio is due to the differing impacts on the respective economies. The energy industry is a big (and increasing) part of the Texas economy, so while there will likely be a boost in consumer spending due to lower fuel prices, areas like Houston, Dallas, Ft. Worth, Midland/Odessa, Corpus Christi, and Longview are still likely to be hit pretty hard, since the energy industry is a large part of their regional economies.

However, while the San Antonio economy will be negatively affected by the downward pressure from slowing growth across the state, it has some unique characteristics that will minimize the impact. One key characteristic is that the mining industry is only about 3% of the San Antonio economy. Additionally, much of that industry in San Antonio is focused on refining, so it will actually benefit from the low oil prices. There has also been some concern that the slowing activity in the Eagle Ford shale area will have a big impact on San Antonio. There will certainly be a negative impact, but the vast majority of the activity in the Eagle Ford area is south of San Antonio. Thus, while the San Antonio economy certainly benefited from the Eagle Ford shale play, the impact on growth was not substantial, and as such, I don’t think the negative impact will be very large, either. Another unique characteristic is that the reduction in employment that will continue as Eagle Ford drilling activity decreases will likely be absorbed by the construction industry in San Antonio. It is not unique to San Antonio that the housing market is very strong, as the housing market is tight across the state. As the Eagle Ford hiring activity increased a few years ago, we saw workers leave the construction industry in San Antonio to work in the Eagle Ford area for much higher wages, but that flow of labor will most likely reverse itself this year. With the tight housing market, construction activity is likely to increase this year, so as employment in Eagle Ford continues to decline, many of these workers but the close proximity of San Antonio to Eagle Ford means that many of these workers will possibly be able to find employment in the construction industry. Lastly, much of the tourism business in San Antonio comes from visitors who drive to the area, so the lower gas prices making it cheaper to drive and providing additional disposable income could cause a boost in tourism in San Antonio.

Other risks to the forecast include slowing growth around the world and the strong dollar. The impact of the strong dollar is already starting to show its effects on the San Antonio economy, but I do not think this will be a large negative impact. It does contribute some to the slowing growth as indicated in the forecast.

If the forecasts come to fruition, growth in Texas will likely fall below that of the U.S., but San Antonio will at least see growth at its historical average rate. However you look at it, 2015 will still be a year of growth.

Network Technologies Drive the Economy

I am reading the book, The Microeconomics of Complex Economies: Evolutionary, Institutional, Neoclassical, and Complexity Perspectives by Wolfram Elsner, Torsten Heinrich, and Henning Schwardt, and I came across this statement:

“Network technologies with their network externalities in use have thus come to govern largely the dynamics of the economy, and an efficient individualistic (i.e., autonomous) maximization is becoming a near-to-irrelevant exemption, as it would fail to take the decisions of others and the external effects of one’s own and the others’ choices into account (see, e.g., Hutter, 2001; Nagler, 2008).”

I think they are exactly right, and while the book focuses on macroeconomics, network externalities are very important (maybe more important) in understanding the functioning of macroeconomics at any level. In actuality, the distinction between the relevance in microeconomics vs. macroeconomics may be a false dichotomy, but either way, it is imperative that network effects become more of the mainstream in both broad branches of economics.

By the way, while I am only on chapter 4 of the book, I have found it to be excellent. It is very well written and thought-provoking. If you have any interest in these topics, I highly recommend you give it a read.

BEA Releases New Data on Arts and Cultural Production for 2012

The U.S. Bureau of Economic Analysis (BEA) recently released new data on arts and cultural production for 2012. While there is a lag in the release of the data, it is exciting that they are providing such data in collaboration with the National Endowment for the Arts.

According to the BEA: “Nominal value added from all arts and cultural production (ACP) industries – a measure of this sector’s contribution to gross domestic product – increased 3.8 percent, or $25.8 billion in 2012, according to new statistics released by the Bureau of Economic Analysis (BEA). Value added accounted for 4.3 percent, or $698.7 billion, of GDP.” (Source: http://bea.gov/newsreleases/general/acpsa/acpsa0115.pdf)

Of the core arts and cultural production industries, the top five by value added (contribution to GDP) were:

  1. Advertising ($29,289 million)
  2. Independent Artists, Writers, and Performers ($19,297 million)
  3. Performing Arts ($16,116 million)
  4. Architectural Services ($13,910 million)
  5. Photography and Photofinishing Services ($8,045 million)

The core arts and cultural production contributed $129,011 million to GDP, while the supporting arts and cultural production industries contributed $547,003 million, and all other industries that have secondary production designated as artistic and cultural production contributed $22,681 million.

Total arts and cultural production amounted to 4,676.4 thousand jobs in 2012 with core arts and cultural production accounting for 956.4 thousand of those jobs. The supporting arts and cultural production industries employed 3,537.4 thousand, and all other industries contributed 182.6 thousand jobs. Interestingly, total employment continues to decline since the 2007. The core arts and production industries showed employment growth in 2011 and 2012, but the supporting arts and cultural production industries have seen declines employment in each year since 2007. I am not sure what is driving this dichotomy, but maybe the core arts and cultural industries are bringing some of the support work in-house causing a decline in employment in the supporting arts and cultural industries.

Inspired by Intimate Impressionism at McNay Art Museum

I recently went with my wife and one of my daughters to see the Intimate Impressionism exhibit at the McNay Art Museum in San Antonio. It was a fascinating exhibit, and I was in awe by many of the paintings. My favorites, in no particular order, were:

  1. “Yacht Basin at Trouville-Deauville” by Eugene Bodin
  2. “Picking Flowers” by Auguste Renoir
  3. “Meadow” by Alfred Sisley
  4. “Boulevard Heloise, Argenteuil” by Alfred Sisley
  5. “Argenteuil” by Claude Monet
  6. “Still Life with Grapes and a Carnation” by Henri Fantin-Latour
  7. “Peaches on a Plate” by Auguste Renoir
  8. “Concert at the Casino of Deauville” by Eugene Bodin
  9. “Festival in the Harbor of Honfleur” by Eugene Bodin

The one that made me say, “Wow” upon first seeing it was Renoir’s “Picking Flowers”, so it has to be considered my top pick on the list.

Picking Flowers by Renoir

Source: https://artsy.net/artwork/pierre-auguste-renoir-picking-flowers

Almost as fun and fascinating as seeing the art was overhearing the various conversations people were having about the paintings. They ranged from, “Those oysters sure look tasty”, to rather in-depth discussions about what the artist was actually trying to portray or might be thinking at the time. It was a clear example of the role the arts and museums on the economy. From the looks of bumper stickers on some of the cars, it appeared that the exhibit did attract visitors from Austin and other areas outside San Antonio, but the more profound impacts, in my opinion, are the enhanced quality of life and the creative inspiration it provided many of those who saw the exhibit. While the ability of an art exhibit to attract visitors to the area is important, It is the impacts to quality of life and the inspiration they provide that attract the skilled, creative workers in all industries to a region, and it is exactly why the arts are so important to the continued development of a regional economy.