Panel of economists predict strong growth for Austin in 2011

A panel of economists were uniformly bullish on Austin’s economic prospects for the New Year on Thursday, predicting growth in 2011 that will outpace the state as a whole.

 

The Great Austin Chamber of Commerce’s Annual Economic Forecast is one of the group’s most popular events. All four professors from major state universities were optimistic about Austin’s economy in 2011, predicting an overall growth rate of just under 3 percent.

 

The one outlier was Texas A&M University Professor Thomas Saving, who predicted a growth rate of 6 percent in the coming year. Saving was not at yesterday’s luncheon, but incoming Chamber Chair Bobby Jenkins presented Saving’s projections.

 

“I just want to know what Dr. Saving is drinking,” joked Dean Thomas Gilligan of The University of Texas at Austin’s McCombs School of Business. “I came out with 2.6 percent. I think there are a couple of wild cards in here. We have a population of 915,000, with about 100,000 state and local and federal workers.”

 

Professor James LaSage of Texas State University agreed with that assessment, predicting a 2.7 percent rate of growth. He pegged private industry growth at around 3.5 percent and a potential 2 percent decrease in the government sector. Balance those two sides out, given that the private sector is 80 percent of the local economy and it comes out to about 2.7 percent overall.

 

Baylor Professor Stephen Gardner of the McBride Center for International Business came out with 2.7 percent in his estimate, compared to a state growth projection of 2.1 percent. The growth of the state, at 2.1 percent, would be “a good strong acceleration against this current year,” Gardner said. He added that the current recovery from the recession is slightly slower than other recession recoveries.

 

The economists expressed various concerns about the economy. Gardner was concerned about the gridlock in Congress, who considered some of the recent positives economic indicators as evidence of a mild recovery.

 

The local economy will need another two or three strong quarters in order to close the unemployment gap, LaSage said. Asked about longer-term predictions, La Sage predicted statewide growth at about 2.1 percent in 2011, followed by 3 percent in 2012 and possibly 3.5 percent in 2013.

 

Asked about potential growth sectors in the recovery, Gardner predicted a rather balanced recovery across industries, with the exception of construction. Both the consumer and business sides of the equation are seeing signs of recovery, which Gardner predicted would be weak but balanced.

 

Gilligan predicted growth in the health care, finance, education and leisure services industry. Unemployment rates for college graduates remain at around 5 percent, while those with a high school diploma are seeing unemployment twice that rate, reflecting the need for skills in the economy.

 

Questions from the audience included whether the new health insurance law was going to slow down hiring. Gilligan agreed new requirements of the law would definitely be a drag on the economy.