45,000 NEW JOBS IN AUSTIN IN 2 YEARS...WOW!!!

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Economist: Austin area to add 45,000 new jobs in next two years
By Kirk LadendorfAMERICAN-STATESMAN STAFF
Friday, Feb. 24, 2012

Austin's puny job recovery over the past two years will accelerate into faster job growth this year and next, economist Angelos Angelou said in his 26th annual forecast event Thursday.

The CEO of Angelou Economics forecast 45,000 new jobs will be added to Austin's five-county metro area in 2012 and 2013, more than doubling the job expansion of the past two years.

Austin added 12,800 jobs last year, and its growth rate of 1.7 percent trailed other major cities in Texas and the state as a whole, which expanded jobs by 2.3 percent.

The drivers for a stronger economy, Angelou said, will be venture-backed startups, a resurgence of established tech companies, an increase in new residents moving into the region from elsewhere and a stronger real estate development sector.

Austin's economy, Angelou said, is getting its groove back.

"I am optimistic about the forecast because I believe we had a significant recovery in the high-tech sector last year, which will continue. We had a 7 percent increase in our number of high-tech workers, expanding to 101,000 last year," Angelou said. "That is substantial. Those increased payrolls are going to kick in this year and next."

"Venture capital seems to be doing fairly well, and if those trends continue, we should see more small companies being formed. And people are continuing to move to Austin. Population growth last year generated about $1.1 billion to our total personal income."

Those new jobs, Angelou predicts, will drive the local unemployment rate down to 5.6 percent in 2013 from its current rate of 6.3 percent. He forecasts the population will expand during the two years by 88,000 to reach 1.84 million by the end of 2013.

The forecast calls for 14,500 single-family home starts during 2012-13 along with the construction of 8,000 new apartment units. It also calls for increased construction of office space, industrial space and retail space as occupancy rates continue to rise.

Angelou also is bullish on the rise in Austin's entertainment events, including continued growth for the South by Southwest festivals, the Austin City Limits music festival and the city's first Formula One auto race, which is scheduled for November.

"We are going back to being a high-tech town, a fun place to be and a great place to live and do business," he said. "Formula One is going to provide a lot to this region over time, and it will be very successful."

The eventual impact of Formula One could reach $500 million a year to the local economy, Angelou estimated.

Angelou, who runs an economic development consulting business, has been giving Austin economic forecasts since he was hired as an economist with the Greater Austin Chamber of Commerce in 1984.

Angelou's forecast usually has tracked the economy fairly closely over the years. He missed in 2009, the worst year of the latest recession, when he forecast weak growth of just over 2,000 jobs, and Austin instead recorded a net loss of more than 16,000 jobs.

While Angelou was upbeat about the local outlook, Jay Bryson, managing director and global economist for Wells Fargo Securities, gave a more guarded outlook about the national economy.

Low interest rates and strong business balance sheets in the United States should promote more growth, but the economy may be constrained by consumers' focus on paying down their debts, Bryson said.

Wells Fargo expects the nation's gross national product adjusted for inflation will expand by 2 percent this year, which is slightly better than the 1.7 percent growth recorded last year.

Continued low interest rates and strong business balance sheets will enable growth, but the key remains how much of their income consumers devote to spending versus paying down past debts.

Bryson said the United States faces a few big risks, including rising oil prices, which could slow down consumer spending, and the deep problems of dealing with heavy government deficits both in Europe and this country.

The European financial crisis still poses a substantial threat to banks in Europe, he said. If the European debt situation is not worked out, it could cause a "major disruption" for the European financial system, which could lead to tighter credit in the U.S.

"Europe is not over yet and is not going to be over for awhile," Bryson said.

Continued heavy deficit spending in the United States probably won't create an economic crisis in this country this year, but he said the issue needs to be addressed by politicians in the next 18 months or risks could rise dramatically.

Business people who are expanding, Bryson said, should consider not only the best-case economic scenario, but how well their business plans would hold up against those major economic risks.

"Caution is well-advised," he said.

kladendorf@statesman.com; 445-3622

Predicted job growth, 2012-13
Industry New jobs % growth
Education/health services 7,200 7.9%

Leisure and hospitality 7,000 8.1%

Retail trade 6,900 8.2%

Professional services 5,700 5.2%

Construction 4,400 11.3%

Other services 2,800 8.1%

Financial activities 2,800 6.5%

Manufacturing 2,600 5.4%

Government 1,700 1.0%

Wholesale trade 1,700 4.2%

Transportation 1,200 9.2%

Information 900 4.7%

Source: Angelou Economics