San Antonio 2018 Economic Forecast

I had the pleasure and honor of being on a panel at an event this past Friday hosted by Texas CEO Magazine in partnership with the Bill Greehey School of Business at St. Mary’s University in which I presented my economic forecast for the San Antonio economy in 2018.

The presentation can be found here.

Employment growth in San Antonio remains healthy but has been slowing a bit over the past twelve months, which follows a similar pattern to the other major metropolitan economies across the state through August. Given the length of the economic expansion, growth rates have regressed toward the long-term average. The unemployment rate in San Antonio is still quite low at 4.1% in August, but it has started to tick up over the past year.

Again, a similar pattern is occurring across the other major metropolitan areas, too. We are at the point in this phase of expansion where the economy is at or very near full employment, so growth is going to be driven by population growth and/or growth in productivity, so it is difficult to see that growth will be much greater than average, if it is at all in 2018. For next year, I believe we continue to see growth in San Antonio with employment increasing in the range 2.25-2.50%, which is around the historical average growth rate of 2.43%. I project that the unemployment rate in 2018 will probably be in the range of 4.00-4.25% in San Antonio in 2018.

You will also see in the slides that I think we need to consider the possibility of the U.S. economy going into recession in the next two to three years. This is simply due to the fact that the current expansion is already 100 months old, which makes it the third longest in history. If growth continues over the next two to three years, it will become the longest expansion in history.

If we learned anything in the last recession, it is that growth does not go on forever. The expansion is long in the tooth. As already mentioned, growth in the foreseeable future is going to come from population growth and/or higher levels of productivity. Given the trends in demographics with the aging baby boomer generation and limitations being put on immigration, it is difficult to see where the population growth is going to come from in the next few years. Boosts in productivity are, in part, going to be driven by technological change, and while that is exceedingly difficult to forecast, it is hard to envision from where the boost in productivity will come in the near future. With this in mind, it seems that the odds are pretty high that the economy will run out of steam within the next two to three years.

Of course, all of this is contingent on various risks, and the biggest risk I see at this point is political risk. The national and global political situation has injected a massive amount of uncertainty into the business and economic environment. This, in and of itself, can be a deterrent to economic growth, but it certainly makes economic forecasts more difficult.

Steve

SRN-LogoMark-Gold-HIRES

Creative Industry Registers $4.0 Billion Impact on San Antonio Economy in 2016

I recently finished the update to the economic impact of the creative industry in San Antonio and was honored to present it at the creative industry luncheon this past Wednesday.

The presentation can be found here.

In 2016, employment in the industry totaled 20,363 with incomes reaching over $914 million. Output was over $3.3 billion with a bit over $1 billion of that being exported from the region. Once multiplier effects are taken into consideration, the total impacts on employment amounted to 24,885 full-time equivalent positions earning incomes of $1.1 billion and registering a total economic impact of about $4.0 billion.

Steve

SRN-LogoMark-Green-FORWEB

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

SRN-LogoMark-Gold-HIRES

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

SN logo no name

 

The Emergence of a San Antonio/Austin Metroplex

I gave a speech today to the San Antonio chapter of the Commercial Real Estate Women.

The topic was the potential for the San Antonio and Austin metropolitan areas to merge into a metroplex or mega-region.

The presentation can be found here: The Emergence of a San Antonio/Austin Metroplex.

Thank you to CREW for the invitation to speak.

Steve

 

SN logo no name

Brexit’s Potential Impact on the San Antonio Economy

With the United Kingdom voting to leave the European Union, it is worth considering the impact it might have on the San Antonio economy. This basically translates to how it might affect the U.S. and Texas economies because I don’t think it will have any direct effects on the San Antonio economy since there is not a very strong connection between the San Antonio and United Kingdom economies. However, there is a reasonable chance that the uncertainty and chaos caused by Brexit throws the United Kingdom and European Union economies into recession. The best I think we can hope for it that it has no effect. I can’t envision a scenario where Brexit increases economic growth in the U.K or the E.U.

While the United Kingdom’s economy is not big enough to throw the U.S.into recession, according to The Economist, “…Britain is big enough for a recession there to have a meaningful effect on Europe’s economy. As a rule of thumb, whatever the reduction in Britain’s GDP growth, Europe’s economy will suffer a drop of about half as much.”

If a recession in Britain does drag Europe into a recession, the ripples across the pond could drag the U.S. economy into a period of slower growth possibly leading to a recession because the European Union taken together is the largest economy in the world. GDP in the European Union was $18.51 trillion in 2014 compared to GDP in the United States of $17.42 trillion in 2014.

In 2015, U.S. exports to the European Union amounted to $272 billion which equated to 13.36% of all exports (See Trade data). This makes the European Union the second largest export market for the U.S. behind Canada at $281 billion. Mexico is the third largest export market receiving $236 billion in exports from U.S. companies. Exports to the United Kingdom were $56 billion in 2015 (2.76% of all exports). While Texas has the largest volume of exports among all states (See Exports by state 2015), the United Kingdom accounted for 1.8% of total exports from Texas in 2015. This relatively low volume of trade does not mean Texas and the San Antonio economies will be immune from the effects of Brexit. If growth in the U.S. economy slows, it is likely that growth in the Texas and San Antonio economies will follow suit.

SN logo no name

 

Economic Impact of LiftFund

Along with many other economists, I have long argued that entrepreneurial activity is a key driver of economic development, and recently, I completed an economic impact study of LiftFund that provides a bit more evidence in support of this idea. “For more than 21 years, LiftFund, a 502(c)(3) nonprofit organization, has helped individuals achieve the American Dream by providing small business loans to those who do not have access to capital from typical lending sources, such as traditional banks” (Source: http://www.liftfund.com/about/). The study analyzed the impacts across their markets in Texas and Louisiana from 2010 through 2015.  Along with the direct effects of the LiftFund lending, the analysis also took into account the multiplier effects, but the impacts for a specific business are only counted in the year in which the new jobs were created (i.e., the impacts were cumulative into the future years).

Here is a summary of the results showing the rather substantial impacts that LiftFund and the small businesses they fund are having on their local economies.

In Texas, LiftFund issued $104 million in loans during this time period, and the loans to these businesses supported 10,758 jobs and earned incomes of $500 million. These businesses produced output valued at $1.4 billion. This means that for each dollar loaned by LiftFund, $13.21 in output was created in the local economy.

In Louisiana, loan volume during this period amounted to $10.6 million. This supported employment of 1,495 earning incomes of $70 million. The businesses impacted by this LiftFund support generated $181 million in output resulting in a return of $17.03 in output per dollar loaned in Louisiana.

SN logo no name

 

2015 San Antonio Creative Industry Growth and Prosperity Report

I recently presented the updated economic impact of the creative industry in San Antonio at the Tobin Center. The measured impacts are for 2014. The presentation can be found here, but in brief the industry has shown steady increases across all measures from 2012 through 2014. As of 2014, the industry, employs 21,736 people who earn over $1 billion in wages. The total estimated output of the industry in 2014 was $4.3 billion. These numbers do not include any multiplier effects. This industry, maybe more than any other industry, registers an impact far beyond its standard economic impacts as previously mentioned because of  its “artistic dividend.” This is a concept coined by Ann Markusen and David King to capture the productivity enhancements and economic growth that would not occur were it not for the presence of artists and other creative workers in the area. So, besides the rather large impact the industry directly has on employment, income, and output, it is a very important industry to the development of San Antonio’s economy because of the productivity improvements it provides to every other industry. Tobin Center for the Performing Arts \

Speech to the American Home Furnishings Alliance

I was asked to speak to the American Home Furnishings Alliance’s annual meeting in San Antonio last week. The topic of discussion was the national and global economy.

I have attached the entire slide presentation for your enjoyment!

It was great meeting such a well respected group of manufacturers.

Steve.

Presentation to American Home Furnishings Alliance 11-13-15