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.
As context for these forecasts, we are expecting the Texas economy to see real gross product growth at a 4.11 percent annual pace, while employment expands at a 2.16 percent annual rate. (Note that we use the wage and salary measure of employment and compound annual growth rates, which reflect changes in the size of the base from which growth is calculated.)
The Fort Worth-Arlington Metropolitan Division (MD) is currently adding jobs at a notable pace, though the expansion is uneven, with gains in some sectors offset by losses in others. Going forward, the area will benefit from stabilization and ultimately expansion in the energy industry. Through 2021, the Fort Worth-Arlington MD is forecast to see gains in real gross product of nearly $26.5 billion, pushing the annual level to $144.9 billion by 2021 (a 4.12 percent yearly rate). Almost 112,900 net new jobs are projected to be added, representing 2 percent per annum growth and total employment of nearly 1.2 million in 2021.
The Austin-Round Rock Metropolitan Statistical Area (MSA) has been experiencing notable job growth across almost all industrial sectors, though manufacturing remains down on an annual basis. The area’s unemployment rate remains significantly below the state and nation, and has decreased over the past year. Our forecast indicates growth in real gross product of 4.29 percent per year through 2021, resulting in an increase of $26.7 billion. About 131,400 jobs are projected to be added over the period (a 2.46 percent yearly rate), while population expands by an estimated 214,400 to reach more than 2.2 million by 2021.
The Dallas-Plano-Irving Metropolitan Division (MD) has been experiencing strong job growth, particularly in the trade, transportation, and utilities segment. Manufacturing remains down slightly on an annual basis, but has recently been adding jobs at a notable pace, which bodes well for future expansion. We are projecting that the area will see more than 312,900 jobs added by 2021, a growth rate of 2.31 percent per year. Real gross product (output) is likely to reach $434.0 billion by 2021, an increase of $80.8 billion over current levels (and a 4.21 percent rate of yearly growth).
Over the past year, the Houston-The Woodlands-Sugar Land MSA added jobs overall, though hiring was very uneven and most industrial sectors shed jobs. As a center for the energy industry, this lackluster performance is not unexpected, and with normalization of oil markets some recovery is likely. In fact, it is a testament to the strength of the area that it has been able to sustain some job gains in the face of the oil and gas downturn. Over the next five years, real gross product is projected to expand at a rate of 4.3 percent per year to reach $579.4 billion (a gain of nearly $110.0 billion). Wage and salary employment is projected to increase by more than 361,800 jobs over the period (a 2.23 percent yearly pace) and reach almost 3.5 million in 2021. Growth is concentrated in the latter years of the forecast horizon, as recovery in energy industries leads to stronger overall expansion.
In the San Antonio-New Braunfels MSA, a few industries continue to contract, but most are gaining jobs. Unemployment in the area is trending below that of the state or nation. We expect the San Antonio-New Braunfels MSA to experience growth in real gross product at a 3.96 percent per year rate through 2021, for an increase of $21.8 billion and a 2021 level of $123.6 billion. Some 122,200 net new jobs are expected to be added, for total employment in 2021 of almost 1.2 million (2.19 percent annual growth).
All in all, though, I think Texas’ major metropolitan areas are likely to be among the more dynamic in the nation for some time to come.
Dr. M. Ray Perryman is president and CEO of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.