Philanthropy Is On the Rise
Americans are a generous bunch, and their willingness to give to help others cuts across all income levels as well as ethnic backgrounds and religious beliefs.
According to data recently released by the Giving USA Foundation of Indiana University, most of the philanthropy goes to the nation’s 1.4 million charitable and religious organizations. These entities provide a wide range of services which includes assisting individuals and groups with immediate financial, physical, or other needs to funding medical research and assuring the future of the arts and educational institutions.
There is a saying that suggests “As the economy goes, so goes philanthropy.” Donations generally track the health of the economy with the annual change normally corresponding to about one-third of the rise in the stock market.
Charitable giving in 2006 set a record of over $295 billion, which was $11.97 billion more than in 2005. This amount, when adjusted for inflation, was around 1% above 2005’s $283.05 billion. Excluding contributions for disaster relief, the 2006 amount is about 3.2% more than the 2005 gifts.
Last year, many charities reaped significant gains by developing close ties to wealthy individuals, foundations, and companies that have benefited from the ongoing economic upswing. While many gifts were from the extremely wealthy, according to the Giving USA report, nearly two-thirds of households with incomes less than $100,000 contributed to charities.
Individual donations accounted for more than 75% of all gifts with bequests, grants, and corporate giving responsible for the remainder. Some nine categories of charities were the primary beneficiaries of these various gifts with religious institutions receiving about 32.8% of the total or $96.82 billion.
Giving to education amounted to nearly $41 million or approximately 13.9% of the total estimated donations. Organizations associated with the arts, culture, and humanities received $12.51 million.
In spite of the overall increase in gifts, many non-profit organizations involved in family services, the arts, and community and economic development still faced fiscal stress that required an increase in staff working hours, which led to turnovers, and the lengthening of time required to provide services.
In a study by Charity Navigator, the nation’s largest independent charity evaluator, charities in the leading 30 metro areas generate 65% of the total revenue and expenses. Based on performance and size, along with fundraising efficiency, the cost of living, and a city’s tendency to support a few specialized causes, two Texas cities were rated among the top 10 philanthropic markets.
Dallas, which was listed 21st last year, jumped to second place behind San Diego this year. Houston, which ranked third in both 2005 and 2006, dropped to 10th position this year due in part to the costs required to secure donations.
Dallas has a high concentration of large charities related to religious activities, while the charities in the Houston area are more diverse in purpose. The largest numbers of charities in both cities are those involved with human services. In Houston, charities designed to support arts, culture, and the humanities, as well as education, represent 27% of that community’s total charities. The same categories are sustained by 17% of the Dallas charities.
The amount of charitable giving in 2006 represented 2.2% of the US gross domestic product adjusted for inflation. This proportion has remained approximately the same as represented by gifts since 1999.
With expectations for the economy to see modest growth over the short term, it’s a safe assumption that Americans, and especially Texans, will carry on the “better to give than to receive” practice and continue to improve the quality of life for those individuals and organizations deserving assistance.
posted @ 07:55 AM CST [link]
Friday, June 22, 2007
The Icing on the Cake
Exploration, drilling, and production in the Barnett Shale natural gas field have transformed the Fort Worth-area economy with thousands of jobs and millions of dollars in investment. The activity has led to royalty and bonus payments to local residents, cities, school districts, and others totaling millions of dollars each year. It has also upped property tax receipts to counties, schools, and other entities, and opportunities and prosperity for the entire region have increased.
The Barnett Shale is one of the most significant onshore natural gas fields in North America and the largest in Texas. While oil and gas fields are nothing new to the Lone Star State, the Barnett Shale is unique in that much of it is located in a highly urbanized area. In fact, the heart of the field may fall right under the skyscrapers of downtown Fort Worth. There are already almost 500 wells within the city limits, and city officials project that this number will more than double by the end of 2010.
My firm recently studied the economic impact of the Barnett Shale and found that when all major categories of stimulus from the Barnett Shale activity are summed, the result includes $5.2 billion in annual output and some 55,385 permanent jobs. These effects are notable even in Fort Worth’s large and diverse economy. Moreover, the impact is growing, with overall effects almost doubling to an average of more than 108,000 jobs and $10.4 billion in output per year through 2015. Both financial benefits and quality-of-life enhancements are flowing to people across the region from many different socioeconomic backgrounds.
This huge surge in economic activity is generating sizable gains for local taxing authorities. The fiscal impact of the Barnett Shale stems from two primary sources: property taxes paid on oil and gas properties and enhanced retail sales and real estate development due to the economic impact of the Barnett Shale. Our analysis indicates that the total direct and indirect revenue to local governments in the region (excluding royalty and lease payments) was about $227.7 million as of 2006, and will likely increase in the future.
In addition to these major sources of income, the Barnett Shale leads to payments of royalties and bonuses directly to cities, school districts, and others; severance taxes of approximately $165.4 million to the State of Texas in 2006; various permits and fees payable to local governments; other types of levies such as hotel/motel occupancy taxes; and other State revenues stemming from numerous types of taxable activity.
Virtually all economic activity involves some cost in terms of the environment, use of infrastructure, or other trade-offs, and the exploration and development of the Barnett Shale is no different. There is noise, traffic, and water use involved. However, these downside elements of the Barnett Shale are, in most instances, being dealt with so as to minimize their lasting effects.
There is still a substantial quantity of natural gas to be extracted from the Barnett Shale. While ultimate production will be determined by numerous factors (such as the pace of technological development, natural gas prices, geology, and demand from major sectors), the field is likely to see substantial activity for many years.
Prior to the emergence of the Barnett Shale, Fort Worth had established itself as one of the largest cities in the state and a major contributor to overall business prosperity. It is also a central part of a dynamic urban region that recently exceeded six million in population. The Barnett Shale is like ‘icing on the cake’ for an area already performing quite well, and even when the Barnett Shale play has been exhausted, many of its positive effects and the significant economic benefits provided will certainly remain.
posted @ 08:16 AM CST [link]
Friday, June 15, 2007
High Tech is Back in the Saddle
The technology sector is “back in the saddle again.” After a wild ride through the early 1990s dot-com boom and a subsequent fall when the bubble burst, high-tech companies are now adding jobs at a pace not seen in more than a decade. Last year, such firms added some 150,000 jobs across the country compared to 87,400 in 2005. In 2005, Texas had the second largest number of workers with about 446,000, behind California (919,322), and ahead of New York, Florida, Virginia, and other leading states in the high-tech industry.
According to a recent report by the American Electronic Association (AeA), tech companies employed approximately 5.8 million people in 2006. The fastest expanding tech businesses last year were software companies, which added about 88,500 jobs. Semiconductor manufacturers increased their worker total by nearly 11,000. On the other hand, communications services and computer and peripheral equipment maker companies lost jobs.
In 2005, the most recent state data available from AeA, Texas added 10,339 tech jobs, compared to California with 14,402. The hike in Texas was fueled by growth in engineering, computer systems design, and semiconductor manufacturing. Florida gained 10,874 new tech workers that year, but has less than 277,000 total employees in tech industries.
While California provides the highest average annual wage for a tech worker at $95,295, high-tech employees in the Lone Star State receive around $75,430 per year. California techies are paid more than double the average private sector wage in that state, while in Texas, the annual salaries of those with high-tech jobs are over 84% higher than the average worker in the private sector. Nationwide, high-tech wages are about 86% above average private-sector salaries. Tech workers make less than $50,000 annually in only seven states and Puerto Rico.
In California, the largest industry sector is computer systems design and related services, while in both Texas and Florida, the chief tech sector is telecommunications services. Texas has about 56 high-tech jobs per 1,000 private sector positions, while California and Florida have 71 and 41, respectively.
A caveat to the above statistics: AeA’s definition of high tech encompasses Internet and telecommunications services along with semiconductors and electronic manufacturing. It does not, however, include the biotech industry, which is an integral and increasing part of general high-tech operations in Texas and elsewhere.
In fact, the biosciences industries are booming across the nation, and some economic observers have even declared the beginning of the “Bio Century.” In the US, about 1.2 million workers take home paychecks from biosciences enterprises. With an almost unlimited wellspring of knowledge to be tapped, every state is strengthening research capabilities in preparation for launching new biosciences activities or expanding those currently in operation.
Biotech has been one of the most sought-after industries and is considered a very attractive candidate by almost every state economic development plan (including Texas’). Drivers in biotech site selection include an appropriate mix of universities, research facilities, incubators, and skilled labor.
Every state and many local communities are always looking to create new organizations, partnerships, and collaborations of joint ventures to entice biotech into their spheres of influence and operation. Among the most important elements in Texas’ arsenal for acquiring and retaining vital high-tech and biosciences projects are the Texas Enterprise Fund and the Emerging Technology Fund. These funds were instrumental in the state’s 363 significant acquisitions or expansions in 2006. . The Lone Star State already has a strong presence in several biosciences sectors, and concerted efforts are underway to cement the state’s position at the forefront of other biosciences fields. Texas is the national leader in agricultural feedstock and chemicals, and continued growth in that sector is expected, especially with the expanding biosciences research facilities at the University of Texas system and Texas A&M University, as well as other places.
To remain a leader in the high-tech arena, Texas must stay vigilant and continually seek ways to increase available workers, strengthen research, and enhance opportunities that encourage ongoing high-tech growth and development across the state. This task becomes even more challenging as major sectors begin to converge in the very tiny but huge world of nanotechnology. The capacity to “think small” will be imperative to future success.
posted @ 07:55 AM CST [link]
Friday, June 8, 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.
posted @ 08:16 AM CST [link]
Friday, June 1, 2007
Long-Term Economic Outlook is Positive
Recently my firm, The Perryman Group, completed the 26th annual edition of our long-term economic forecast for the United States, Texas, and the state’s major metro areas and regions. I believe some of the findings and projections regarding our nation and state might be of some interest to you.
Since we began developing long-term outlooks in the early 1980s, there have been significant changes in almost every area of our economy. Among them are booms and busts of the oil industry, highs and lows of real estate, swings in interest and inflation rates, deregulation of numerous industries, major shifts in tax policy, international conflicts, terrorist attacks, and various natural disasters, as well as the advancement of technology and its impact on the global economy.
In addition, we have experienced a variety of trade agreements, major alterations of corporations, stock market gyrations, the Internet phenomenon, and the mapping of the human genome.
Through it all, I have been optimistic about the future of our nation, especially the possibilities that exist for ongoing economic expansion in the Lone Star State. Although we continue to face numerous challenges today, the underlying structures of our national and state economies are sound, and we are moving in the appropriate direction to ensure future prosperity over the long term.
The US economy tops the world with rapid growth, real income gains, and wealth creation. The nation’s gross domestic product (GDP—the output of goods and services produced by labor and property) continues to expand. We should see healthy growth in all key economic indicators through the forecast horizon of 2006 to 2030. Both real GDP and real personal income are likely to more than double during this timeframe, with compound annual growth rates (CAGRs) of 3.36% and 3.45%, respectively.
By 2030, the population of the US is expected to approach 370 million, with diversity continuing to rise. Nearly 47 million new jobs are forecast during this 24-year period. Interest rates are projected to moderate to some degree on a trend basis.
Although the Texas economy is no longer enjoying the rapid expansion of past years, we anticipate the real gross product CAGR from 2006 to 2030 will be 3.78%, surpassing that of the US during the period.
Our state’s population is forecast to reach nearly 35 million by 2030, a jump of some 11.52 million. Employment is likely to climb about 4.58 million and arrive at 15.14 million in 2030. The annual growth rates for population and wage and salary employment are predicted to be 1.68% and 1.51%, respectively.
Real personal income (by place of residence) is expected to achieve a yearly expansion rate of 3.68% from 2006 to 2030, with retail sales (in current dollars) experiencing a CAGR of 6.32% over this period.
In Texas, the energy sector is healthy due to lingering high oil and gas prices. The state’s strong presence in the oil and gas sector will remain a source of economic stimulus in numerous areas of the state.
Continuing high fuel costs, however, are beginning to impact numerous segments of the economy, restraining profit margins in airline, trucking, and other transportation-oriented sectors. Energy prices are forecast to stay relatively stable, with an upward trend expected through the long term. As a result, elevated fuel costs will be integrated into the overall expenses of business operations, thereby raising prices of various goods and services.
Foreign trade remains a crucial element of the state economy, and Texas continues as the nation’s export leader. Even though shipments to Mexico have declined in recent months, exports to the rest of Latin America are picking up. Sales to China are also increasing, up almost 37% last year compared to 2005.
Regardless of political considerations related to immigration, the US economy is dependent on the immigrant workforce. Finding effective ways to make the process of immigration more efficient while maintaining security is extremely important to the future prosperity of our state and nation.
Although there will certainly be cyclical variation from the forward progress expected over the years (due to issues such as military activities in the Middle East, cooling real estate markets, inflationary concerns, and others), the predominant pattern of our economy will be one of growth through the long term. Thus, the US and Texas economies should remain strong, with innovation and expanding productivity contributing to future prospects.