SAN ANTONIO ECONOMIC OUTLOOK: 2014

Presented on: March 28, 2014

Presented by: Steve Nivin, Ph.D.
Please contact Steve Nivin with any questions or comments at snivin@saberinstitute.org or 210-517-3609.

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Business Cycle Index: San Antonio Seasonally Adjusted

100.0

150.0

200.0

250.0

300.0

350.0

50.0

Jan-79 Jan-81 Jan-83 Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan-11 Jan-13

0.0

Business cycle index indicates growth in San Antonio

Source: Federal Reserve Bank of Dallas

Unemployment rate in San Antonio second lowest among major metropolitan economies in Texas
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Region San Antonio Austin Dallas Ft. Worth Houston Texas U.S.

Unemployment Rate (January 2014) 5.3% 4.6% 5.6% 5.5% 5.5% 5.7% 6.7%

Source: Bureau of Labor Statistics; Federal Reserve Bank of Dallas

Unemployment rate in San Antonio declined in January for the 4th consecutive month
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Unemployment Rate (Seasonally Adjusted)
12.0 10.0 8.0 6.0 4.0 2.0 0.0 San Antonio Austin Dallas Ft. Worth Houston Texas U.S.

Source: Bureau of Labor Statistics; seasonal adjustment by Federal Reserve Bank of Dallas

Unemployment rate decreased to 5.3% in January…right at average since 1990
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Unemployment Rate in San Antonio (Seasonally Adjusted)
9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2008 2009 2010 2011 2012 2013 2013
Source: Bureau of Labor Statistics; seasonal adjustment by Federal Reserve Bank of Dallas

Avg. since Jan. 1990 = 5.3%

Broad-based employment growth (Jan. 2013 – Jan. 2014)
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Region San Antonio Austin Dallas Ft. Worth Houston Texas U.S.

Employment Growth 2.27% 3.57% 1.95% 1.92% 2.03% 2.68% 1.67%

Employment Increase
MLC, Wholesale, Retail, TWU, Information, Financial, Prof. Services, Educ./Health, Hospitality, Other Services, Govt. MLC, Mfg., Wholesale, Retail, TWU, Information, Financial, Prof. Services, Educ/Health, Hospitality, Other Services, Government MLC, , Mfg., Wholesale, Retail, TWU, Information, Financial, Prof. Services, Educ./Health, Hospitality, Other Services, Government MLC, Mfg., Wholesale, Retail, TWU, Prof. Services, Educ/ Health, Hospitality, Other Services, Government MLC, Mfg., Wholesale, Retail, TWU, Information, Prof. Services, Educ/Health, Hospitality, Other Services, Govt. MLC, Mfg., Wholesale, Retail, TWU, Information, Financial, Prof. Services, Educ/Health, Hospitality, Other Services, Govt.

Employment Decrease
Mfg.

Financial

Information, Financial Financial

Source: TWC; BLS; Federal Reserve Bank of Dallas; Change calculations by Steve Nivin, Ph.D. MLC=Mining, Logging, and Construction; TWU=Transportation, Warehousing, Utilities

Growth trend since end of recession similar to growth pre-recession
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Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

San Antonio employment grew 2.27% in January
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10.00%
Change from Same Month Previous Year

8.00% 6.00% 4.00% 2.00% 0.00% -2.00% -4.00%

San Antonio average annual employment growth rate = 2.27%

San Antonio Austin Dallas Ft. Worth Houston Texas U.S. 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

-6.00%

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

Employment growth has come back to its long-term (since 1991) trend
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Employment Growth in San Antonio
(Change from Same Month Previous Year) 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% -3.00%
San Antonio average annual employment growth rate = 2.27%

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Most sectors either continued to see growth during recession or have returned to their pre-recession employment levels plus
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Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

Construction & mining and manufacturing should continue to grow this year and at least get closer to their pre-recession levels of employment… information sector still facing structural headwinds
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Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

Should continue to see growth in these sectors…with higher levels of uncertainty around health and government
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Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

Single family housing market is very strong in San Antonio and across Texas.
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Months-in-Inventory: Single Family Homes

10 9 8 7 6 5 4 3 2 1
2006-Jan 2007-Jan 2008-Jan 2009-Jan 2010-Jan 2011-Jan 2012-Jan 2013-Jan 2014-Jan

San Antonio Austin Dallas Ft. Worth Houston Texas

0

Source: Texas A&M Real Estate Center Months in inventory measures how many months will take to sell the current inventory, based on the average number of sales per month in the previous year.

Robust increases in home prices are indicative of a tight market.
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15.00%
Real Median SF Home Price (4MMA, Y/Y % Change)

10.00% 5.00% 0.00% -5.00% -10.00%
2001-Jan 2002-Jan 2003-Jan 2004-Jan 2005-Jan 2006-Jan 2007-Jan 2008-Jan 2009-Jan 2010-Jan 2011-Jan 2012-Jan 2013-Jan 2014-Jan

San Antonio Austin Dallas Ft. Worth Houston Texas

-15.00%

Source: Texas A&M Real Estate Center; Calculations by Steve Nivin, Ph.D.

2013 San Antonio Economic Forecast
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!!

2013 Forecast = Employment growth of 2.25-2.75%
!! Risks:

Sequestration, E.U., China

!!

Midyear Update: At best will end up at lower end of forecast. Most likely will see growth between 1.0-2.0%.
!! Biggest

risk is sequestration. International risks (e.g., E.U. and China) worth watching closely.

!!

Employment growth in 2013 was 2.3% (20,400 jobs)

2014 San Antonio Economic Forecast
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!!

!!

Accelerating growth in global, U.S., and Texas economies Growth in San Antonio should also accelerate in 2014
!! Many

sectors should see accelerated growth (e.g., construction, manufacturing, professional services, hospitality) !! Healthcare and financial services continue with adjustment to Obamacare and financial reform
!!

2014 Forecast
!! Employment

growth of 2.5-3.0% (22,800-27,500 jobs) !! Unemployment rate will decline to 4.8-5.0%

Thank you!!!
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