06/17/2005: "Long-Term Economic Outlook for US and Texas is Positive"
While there may be some bumps in the US and Texas economies over the next several years, I am very optimistic about the long-term prospects for continued positive expansion. In a previous column, I described key underlying factors driving future growth in the economy. Given those conditions, here are my latest projections for the US and Texas economies.
Looking at the years from 2004 to 2030, I anticipate that our nation’s real gross domestic product (inflation adjusted) will achieve a 3.39% compound annual growth rate (CAGR). This per annum climb compares favorably with the 1984 to 2004 per annum hike of 3.14%.
The US population will probably increase by some 75.1 million over the long term, reflecting a yearly growth rate of 0.88%. Wage and salary employment for the years from 2004 to 2030 should see a 1.24% annual hike and reach 180.9 million.
According to the projections that I recently prepared for my annual long-term forecast, the Lone Star State will likely exceed the pace of growth in the US over the 2004-2030 timeframe. Real gross product (RGP or output) is expected to rise 3.55% annually; population will expand 1.69% yearly, and employment is predicted to increase at a 1.60% per annum rate.
As in the past, the bulk of the long-term economic growth across the state will be evidenced in the metropolitan statistical areas (MSAs), with the six major metros accounting for the vast majority of the total gain. Of the $1.10 trillion RGP growth projected from 2004 to 2030, the larger MSAs will generate about 80.12% of the increase, while the 21 smaller metros provide 12.42%.
Leading the group will be the Dallas metro accounting for 28.52% of the state’s total growth, followed by Houston, 25.64%; Austin-San Marcos, 8.41%; Fort Worth-Arlington, 8.38%; San Antonio, 7.16%; and El Paso, 2.00%.
A population gain of 12.34 million is predicted across the state from 2004 to 2030, with the six major metros responsible for about 72.03%. Expected increases include Houston—2.76 million; Dallas—2.51 million; Fort Worth-Arlington—1.20 million; Austin-San Marcos—1.12 million; San Antonio—0.99 million; and El Paso—0.31 million.
Growth in the 21 smaller MSAs will probably total approximately 2.5 million over that period with the McAllen-Edinburg-Mission MSA accounting for 20.34% of that increase.
Some seven out of every 10 new jobs added over the long term in Texas are projected to be located in the larger metros. By 2030, about 69.69% of all employment in the state will be in the major MSAs. Currently, these areas provide about 68.47% of all the jobs in Texas.
The major metros and expected number of new jobs added from 2004 to 2030 are: Dallas—1.18 million; Houston—1.05 million; Fort Worth-Arlington—453,900; San Antonio—448,400; Austin-San Marcos—419,000; and El Paso—135,700.
Forecasts for other major economic indicators suggest that retail sales in Texas should achieve a 5.47% CAGR over the long term, and real personal income (by place of residence) is likely to see per annum expansion of 2.93%. Retail sales annual hikes in the state’s metro areas are projected to range from 5.03% (Killeen-Temple) to 5.71% (Dallas).
In spite of continued concerns and challenges, the long-term outlook for the US and Texas is very positive as underlying factors for sustained growth are favorable. Business cycles are inevitable, and may cause unexpected fluctuations. Even so, the overall economic pattern is forecast to be one of gains in output and employment in virtually all industrial sectors over the 2004-2030 timeframe.