Economic forecast predicts rebound for Central Texas

By Eric Pulsifer Friday, 22 January 2010

AUSTIN — Things are looking up for Central Texas' economy over the next two years, according to economist Angelos Angelou.

Angelou—former Austin Chamber of Commerce Vice President of Economic Development and CEO of AngelouEconomics, an Austin-based economic development and site selection consultancy—is considered to be largely responsible for establishing Austin as another Silicon Valley. At his annual Economic Forecast Jan. 21, Angelou said he is very optimistic about the outlook for 2010 and expects the region to see 26,000 jobs added over the next few years.

"Austin remains in an enviable position compared to the rest of the country," Angelou said. "The metro area is on a solid road to recovery."

Texas is now the 11th largest economy in the world, but the state lost 200,000 jobs last year while the population grew by 478,000, the largest gain of any state in the country. Angelou said the City of Austin registered the largest decline of retail sales in Texas but that the region still managed to fare better than other metros around the U.S., losing only 2,600 jobs, or 0.3 percent.

Angelou attributes the relative stability to the fact that Central Texas did not experience a housing bubble.

Austin outperformed the U.S. market for 2009 but the average home value declined slightly to around $237,000. Angelou projects that 2010 and 2011 will see a higher demand in housing and said that Austin's affordability has increased over the past decade and that Austin-area homes remain much more affordable than those in other metro areas.

Projections from Angelou's forecast included:

• The area will see mild job growth this year with a return to pre-recession numbers in 2011.
• The metro area's population will reach 1.835 million by 2011.
• Retail will increase by $500 million and retail and wholesale employment will recover over the next two years.
• By 2015, Austin will make up less than half of the retail market in the metro area.

Angelou said the city and county must support the chamber in attracting high-paying jobs by providing incentive package to lure major employers. For those looking to start a new business, Angelou said cheap office space and an abundance of talent make 2010 the ideal time.

"Now more than ever is the best time to start a business," he said.

Looking to the future's economy, Angelou predicts that clean technology and renewable energy will be huge over the next 10 years, and though Austin has a good reputation for clean energy, he said we fall behind competition in Oregon and New Mexico in wind and solar manufacturing.

"If we don't get on that train, I don't know what is going to drive our economy going into the future," he said.

Health care and biotechnology will also continue to thrive, Angelou said. The health industry already employs about 50,000 people in the region, but healthcare reform could result in more people using medical services than before, growing the industry further.

"If the healthcare bill passes, we will see unprecedented growth in the health industry," Angelou said. "This could becoming the biggest stimulus of our economy.

Other economic bright spots, Angelou said, will include:

• Creative media—the video game industry has already surpassed both the music and movie industry and more than half of adults play games
• Data centers—these create jobs with a starting salaires around $80,000 and will grow in value as more storage space is need for 3D television and internet technology
• Software development

A copy of the entire report is available at http://www.angeloueconomics.com/news_presentations.html.