The Greater Austin Chamber Of Commerce posted some very interesting
information this week about Texas and our major metro areas, and their
relative performance economically. The article points out that
the Texas Index of Leading Indicators bottomed in March 2009 and has
been rising since then, gaining 5% in the past twelve months and 2.8%
in the last quarter. Of course, forecasting is forecasting, but
optimism is so consistent among economists and Austin market watchers
that this is quite believable and encouraging.
The Chamber's article also highlights a variety of views of its
backward-looking Business Cycle Index. The complete article is
available at Central Texas Economy In Perspective, and even
more detail is linked there, but I want to focus on just a few charts.
First, here is a comparison of Austin and other Texas cities at the end
of last year, along with 12-month and 24-month views:
Notice that over the entire two-year period, Austin showed the slowest
growth, and even over all of 2010 only San Antonio showed less
improvement. In November and December, Austin's growth was second
to Houston.
Zooming out to comparison of these cities from 2004 through 2010:
I have written many times about Austin's strong economic circumstances,
and that is apparent in this chart, with only Houston outperforming
Austin in terms of growth in this index.
If you follow my blog you know that I analyze the Austin/Central Texas
real estate market frequently and in many different ways, and I am an
unabashed Austin booster. Nonetheless, this chart frankly
surprised me:
When the index is "zero'd" at 1980, it becomes extremely visible how
successful Austin has been, with the Business Cycle Index rising at
twice the rate of the entire state, and about 50% faster than Houston!
The dot-com boom and bust are very apparent, as in our late entry into
the recent recession. The return to slow improvement last year is
also clear. What is interesting, though, is that Austin's
economic expansion began long before the birth of the World Wide
Web. In the late 1980s there was a "reset" in the housing sector
much like that we've seen in the past three years, and a recession that
came with it. That's when Austin's growth took hold. Given
that tremendous contrast over the long-term, Austin's less "exciting"
performance in the past two years loses importance.
Leading indicators and numerous economic and business forecasts
continue to predict Texas generally, and Austin specifically, to be the
growth powerhouse in the coming growth cycle. As I have said
before, I believe 2011 will be a transitional year with limited growth,
at least in the real estate business, but in 2012 we should return to
more normal historical circumstances.
Rainer
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