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.