Austin: Navigating the “Great Reset” and Creating a More Sustainable Economy

Austin: Navigating the “Great Reset” and Creating a More

Sustainable Economy

Leadership AustinOctober 26, 2010

Brian Kelsey, Presenter

Leadership Austin 2 October 26, 2010

Overview

1. Pre- and post-recession economy

2. Equity and sustainability

3. Discussion


US: Depth of the Great Recession


US: Growth driving growth 2002-07

United States% US Emp

2002Job Growth

2002-07% TotalGrowth

Health Care and Social Assistance 10% 2,265,903 15%

Real Estate and Rental and Leasing 3% 2,079,117 14%

Professional, Scientific, Tech Services 6% 1,825,371 12%

Construction 6% 1,775,786 12%

Administrative, Wst Mgt, Remediation 6% 1,422,690 10%

Accommodation and Food Services 7% 1,312,946 9%

Finance and Insurance 5% 956,505 6%

Government 14% 800,561 5%

Manufacturing 10% -1,262,069 -9%

Source: EMSI. Industries selected based on job growth. Not all industries shown.

Source: U.S. Bureau of Economic Analysis


US: The “Great Reset” 2007-2009

• Housing collapse• Financial crisis• 5-7 million jobs lost• 10% unemployment• Spending down• Foreclosures


US: Economic recovery 2009-today

• GDP is growing again, but no labor market improvements in many regions

• Housing prices are stabilizing, but rising foreclosures in many markets

• Uncertainty causing many consumers and investors to stay on sidelines


Austin rated top U.S. city for 2010

Leadership Austin 10 October 26, 2010Source: http://www.pswrealestate.com/blog/2010/05/austins-2010-accolades

#1 – Austin Best City for Next DECADE! – Kiplinger

#2 – May 24, 2010 – Austin 2nd Most Innovative City – Forbes

May 24, 2010 – Austin ranks high on Quality of Life – Portfolio.com

May 11, 2010 – Austin Surviving and Thriving in Recession – Mainstreet

#1 – Apr 28, 2010 – Texas Cities Best Place for Jobs (Austin #1) – NewGeography

Apr 20, 2010 – Austin #3 Best City to Relocate – RelocateAmerica.com

#1 – Apr 1, 2010 – Austin tops Builder Market Health Index for 2010 – Builder Magazine

Mar 25, 2010 – Austin the model for US job recovery – Time Magazine

#1 – Mar 8, 2010 – Austin Best Economic Recovery in U.S. – Forbes

Feb 25, 2010 – Austin #1 Healthiest Housing Market in 2010! – Builder Magazine

Feb 23, 2010 – CNN’s take on why Austin is different, and leading nation’s recovery – CNN

#1 – Feb 5, 2010 – Austin #1 for Small Business in 2010 – BizJournal

#1 – Jan 22, 2010 – Austin Top City for Starting a Business – Bizjournals

#1 – Jan 8, 2010 – Austin tops in US for GMP – Fiscal 2009 according to Brookings Source: http://www.pswrealestate.com/blog/2010/05/austins-2010-accolades


Austin’s flirtation with recession

Source: MSNBC Adversity Index, Moody’s Economy.com

According to Moody’s Economy.com, Austin-Round Rock-San Marcos entered recession in February 2009, more than a year after the U.S. economy (December 2007). The recession lasted only six months in Austin. Economic indicators started turning around in August 2009. The U.S. recession officially ended in June 2009.


Brookings: Austin in top 20 metros

Rankings for Austin-Round Rock-San Marcos (100 largest metro areas)

Employment growth #4Unemployment rate #13Gross metro product #2

Housing prices #10Real-estate owned properties #30

Source: Brookings MetroMonitor, September 2010


Employment growth


-2%

0%

2%

4%

6%

8%

10%

12%19

70

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

United States

All U.S. Metropolitan Areas

Austin-Round Rock-San Marcos

Average: 4.7%2008: 3.3%


Population growth

0%

1%

2%

3%

4%

5%

6%

7%

8%19

70

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

United States

All U.S. Metropolitan Areas



Average: 3.8%2008: 3.7%


Moody’s: Back to jobs peak mid-2011

Source: USA Today, Moody’s Economy.com


Austin: Job growth by major industry

Austin-Round Rock-San MarcosJobs2009

Growth2002-09

Percent2002-09 U.S.

Professional, Scientific, Tech Services 103,030 30,945 43% 19%

Real Estate 58,230 23,315 67% 43%

Government 166,925 22,176 15% 5%

Accommodation and Food Services 76,924 19,151 33% 10%

Health Care and Social Assistance 80,869 18,029 29% 20%

Retail Trade 99,335 15,153 18% 0%

Finance and Insurance 52,589 13,171 33% 12%

Manufacturing 55,898 -9,843 -15% -18%

Total 1,037,517 193,514 23% 7%

Source: EMSI. Selected industries based on job growth 2002-09. Not all industries shown.


Austin: Job growth by occupation

Austin-Round Rock-San MarJobs2009

Growth2002-09

Percent2002-09 U.S.

MedianWage

Sales and related 144,647 33,494 30% 11% $25,730

Office and admin support 151,329 21,602 17% 1% $31,408

Business and financial oper 70,654 18,347 35% 18% $44,970

Food preparation and serving 70,617 17,527 33% 10% $18,470

Management 84,622 16,580 24% 11% $57,242

Education, training, and library 60,527 11,751 24% 11% $56,139

Arts, design, ent, sports, media 40,853 10,091 33% 14% $28,246

Construction and extraction 51,202 8,653 20% 4% $34,445

Total 1,037,517 193,514 23% 7% $38,002

Source: EMSI. Selected occupations based on job growth 2002-09. Not all occupations shown.


Income stagnation

Source: U.S. Bureau of Economic Analysis, EMSI

60%

70%

80%

90%

100%

110%

120%19

70

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Austin-Round Rock-San Marcos % of U.S.

All U.S. Metropolitan Areas % of U.S.

2009: 90.8%(lowest since 1989)

U.S. PCI


Quality of life

$19,258

$30,522 $35,611

$39,591

$59,366

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

One Adult, No Children

Single Parent, One Child

Single Parent, Two Children

Two Parents, One Child

Two Parents, Three

Children


Median wage (all jobs): $38,002

Growing jobs (2002-09): $32,458

Declining jobs (2002-09): $27,851

Source: EMSI, Center for Public Policy Priorities. Wages are from Family Budget Estimator and show what’s required to meet basic needs in Austin-Round Rock-San Marcos assuming employer sponsored health insurance.


Workforce competitiveness

71%

54%

31%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Asian White Black Hispanic

% Population Age 25+ by Race/Ethnicity in Austin-Round Rock-San Marcos with a Postsecondary Degree

Texas State Data Center projects that 63% of total population growth in Austin-Round

Rock-San Marcos during 2010-2040 will be due to growth among Hispanics.

Austin-Round Rock-San Marcos will be majority-minority sometime around 2025. Hispanics will be the largest race/ethnicity

group in 2040.

79% of new high-wage jobs (pay > overall median wage) during 2010-2020 will

require a postsecondary degree.

Source: U.S. Census Bureau, Texas State Data Center, EMSI


Educational attainment

Source: ESRI


Sustainable communities

Median multiple is the ratio of median residential sales

price to median annual wage by zip code. In other

words, do jobs located in the zip code pay enough to give

workers an opportunity to live near where they work?

Historically, the median multiple for home prices to household income is in the range of 3.0 for most areas.

Source: EMSI, Decision Data Resources, Austin Board of REALTORS. Residential median sales prices are YTD 2010 as of July. Map shows only those zip codes with at least 10 home sales.


Discussion

• How can we ensure that Austin remains among the leading U.S. regions?

• What can we do to help more people participate in Austin’s success?

• What changes will be needed?


Brian Kelsey

512-731-7851

[email protected]

@brianjkelsey

http://civicanalytics.com

facebook.com/economicdevelopment

linkedin.com/in/brianjkelsey

Special thanks to EMSI, Decision Data Resources, and Austin Board

of REALTORS for making data available for this presentation.

http://economicmodeling.com

http://www.decisiondata.net

http://www.abor.com

Austin: Navigating the “Great Reset” and Creating a More Sustainable Economy

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