06/08/2007: "Texas Major Metros Vital to State’s Economic Future"
For more than a quarter century, I have been producing economic forecasts focusing on the Lone Star State. As a part of my analysis of what’s in store for the future, I have given particular attention to the state’s metropolitan areas, especially the six large ones that constitute a majority of the business activity.
There are 26 metro areas in Texas, and they encompass 77 of the state’s 254 counties. The largest six, which I refer to as the major metros, are comprised of 36 counties. The metros are Austin-Round Rock, Dallas-Plano-Irving, El Paso, Fort Worth-Arlington, Houston-Baytown-Sugar Land, and San Antonio.
These areas are of strategic and ongoing importance to the economic health of all parts of the state. They currently account for approximately two-thirds of the residents of Texas. Through the long term (2006-2030), the number of residents in the major metros is expected to grow by more than 8 million. This increase represents almost 70% of Texas’ overall population gain for the 24-year period.
The greatest gains are projected to be seen in the Houston-Baytown-Sugar Land and Dallas-Plano-Irving areas, which will likely account for about 24% and 19%, respectively, of the state’s aggregate population expansion. In terms of the rate of growth during the 24-year span, Austin-Round Rock and Dallas-Plano-Irving are forecast to lead the pace with 1.80% compound annual growth rates (CAGRs).
These six metros are the economic generators for Texas, as they currently produce more than 80% of the state’s overall real gross product (RGP or output). In 2030, it is predicted these areas will represent almost 82% of the total RGP of Texas, reflecting some 83% of the aggregate real gross product gain during the 2006-2030 period.
The services industries are projected to be responsible for 22% of the more than $288 billion increase in the state’s overall output from 2006 to 2030. Of this amount, the six major metros combined are expected to account for more than $8 out of every $10 added.
The Texas industrial sector with the second highest anticipated output gain from 2006-2030 is finance, insurance, and real estate at $228 billion. The six largest metro areas are forecast to provide almost 89% of this amount over the long term.
Some 75% of the predicted new jobs to be added in Texas through 2030 will likely be in the major metro areas. Of the 3.42 million workers to be added, approximately 24% are projected for Houston-Baytown-Sugar Land, followed by Dallas-Plano-Irving with 22%.
While these areas are expected to achieve the largest hike in the number of wage and salary workers over the long term, the Austin-Round Rock metro is forecast to have the fastest per annum growth rate at 1.74%. The employment CAGRs for the other five metros should range from 1.51% to 1.62%.
From 2006 to 2030, the six key areas are anticipated to account for an $898 billion increase or about two-thirds of the state’s total gain in retail sales. Some 65% of this amount is expected to be provided by the Houston-Baytown-Sugar Land and Dallas-Plano-Irving areas.
In terms of real personal income (RPI by place of residence) gains, the largest metros are forecast to supply approximately $723 billion over the long term or about 76% of the state’s aggregate RPI expansion. The yearly RPI growth rates for these key areas are projected to range from 3.62% (Fort Worth-Arlington) to 4.00% (Austin-Round Rock).
Although the Lone Star State is known as a place with wide open spaces, the future health of our economy is heavily dependent upon the major metropolitan areas. They are substantial sources of our prosperity and where most Texans live and work. Moreover, much of the activity in the remainder of the state is dependent on various types of production emanating from these dynamic urban centers.