The Perryman Group's most recent economic projections for Texas' largest metropolitan areas incorporate the potential effects of COVID-19 and the downturn in the energy sector. Like the US and Texas, these population centers will see significant losses this year, but a fairly rapid recovery once the worst virus issues have passed. The economic fallout will be significant for each, with the degree of decline and speed of recovery influenced by the differing concentrations of industries across population centers. The downturn, while sharp and painful, will likely be more of a pause than a fundamental change.
Dr. Perryman explains the updated Perryman Group forecasts for the economy in the coming year.
Metropolitan areas across Texas have regained most of the jobs lost due to COVID-19. While growth that would have otherwise occurred has been foregone or at least delayed, the long-term outlook remains quite positive.
The major drivers of much of the economic activity across the state are Texas' largest metropolitan statistical areas (MSAs). Our long-term forecast for these population centers indicates continued expansion. Let's take a quick look at our projections for growth through 2045.
Communities across Texas are contributing to economic growth. Although the state's largest metropolitan statistical areas (MSAs) are where the lion's share of economic activity occurs, most of the smaller population centers are also performing well. For example, the Midland, Amarillo, Lubbock, and Odessa MSAs have been ranking among the lowest unemployment rates in the state. My latest forecast calls for notable growth in each of these important regional centers of business activity.
Texas' most populous metropolitan statistical areas (MSAs) typically drive overall economic growth, with a large and growing majority of business activity and job gains. Over the next five years, The Perryman Group's forecast indicates that the Dallas and Austin areas will lead the way in output and employment growth, followed closely by the San Antonio and Houston areas. As context, the Texas economy is expected to see output (real gross product or RGP) growth at a 3.82% annual pace, while employment expands at a 2.02% annual rate.
By 2021, I am projecting that the 19 smaller Texas Metropolitan Statistical Areas (MSAs) will add a total of about 215,000 net new jobs to the state. The growth rates over the period, which spans the 2016 to 2021 time horizon, will vary markedly. Some areas will outpace the state rate of expansion, while others will grow more slowly.
Texas' largest metropolitan areas are the source of the majority of the state's business activity, and what goes on in these major population centers affects companies, families, and communities statewide. Over the next five years, we are forecasting that the greater Austin area will continue to lead the way, with several other major cities also outpacing the statewide rate of growth.
Texas' smaller metropolitan areas will likely be the source for one of every six net new jobs over the long term, and are an important contributor to overall economic growth. These 20 metropolitan statistical areas (MSAs) range in population size from less than 100,000 to almost 850,000 residents, serving as centers for business activity for the surrounding smaller communities and rural areas.
Texas' largest metropolitan areas are set for relatively healthy growth over a long-term horizon. Business cycles will happen, but when we look out through 2040, the state's major population centers are likely to continue to compare well with most parts of the country in terms of economic expansion. The Austin and Dallas areas should lead the way, with Houston, San Antonio, and Fort Worth also doing quite well. For reference, our most recent long-term forecast for the state economy indicates that Texas output (real gross product) will likely expand at a 3.35% annual pace through 2040, while total wage and salary employment grows at a 1.64% yearly pace.