Waco is poised for an economic recovery, but it’s likely to be a long, slogging march rather than a full-on sprint, the first monthly study of the city’s business activities indicates.

The July Greater Waco Economic Index of 105.1 is a tenth of a point lower than June and the lowest July figure in five years.

But the financial report card shows that the local economy has improved since hitting its recession low point in December of last year.

Karr Ingham speaks at Wednesday’s economic press conference.
Rod Aydelotte/Tribune-Herald

The index, prepared by Amarillo economist Karr Ingham, is a number based on business activity in different sectors of Waco’s economy and compared to historical data going back to January 2000.

A base line of 100 was assigned to the January 2000 numbers, and that number is the basis for comparison for the current numbers.

The index is sponsored by the First National Bank of Central Texas and the Waco Tribune-Herald . Ingham presented the July findings to media representatives and Waco business leaders Wednesday.

The July index peaked at 111.4 in 2007 and was 105.6 in July 2009.

The July 2010 figures are still an improvement from December 2009, when the index sank to 104.6 — the lowest figure since August 2004.

“At best, we have a recovery, but it is a slow, plodding recovery that doesn’t have a lot of momentum behind it,” Ingham said.

Waco’s economic picture is consistent with most metro areas in Texas, Ingham said, and may actually be a little brighter than some.

The Waco economy isn’t tied as closely to commodities-based industries such as agriculture and oil and gas as some other areas, which can help, he said.

“Virtually every metro area in Texas has experienced a downturn that is very similar in characteristics to this one. This has been the rule rather than the exception,” he said.

As Texas has diversified, its economy has become increasingly similar to the national economy, and national trends will continue to impact local economies in Texas, Ingham said.

The index comes amid concerns about the nation slipping back into recession.

Ingham said double-dip recessions are rare and that the nation probably will continue into recovery.

Still, the danger of a renewed recession is a possibility, he said.

Baylor University’s Tom Kelly, a local economist, also said a new recession is unlikely but that recovery will take a long time.

“I don’t see a double dip. I think there is enough momentum to keep the economy going with slower growth,” he said.

How the index works

The Waco index is similar to a national index published periodically by the federal government but is calculated by Ingham just for the Waco market.

The most important indicators have to do with retail spending, hotel-motel tax receipts, existing home sales, average home sale prices, automobile spending, building permits and employment statistics.

When recessions occur and numbers related to commercial activity are shown on a graph, economists usually expect a V-shaped line, with a sharp drop in activity followed by a strong recovery, Ingham said.

This time, it is marked by a steep drop followed by a shallow climb out, he said.

During the eight years before the recession hit, Waco’s index gained 10 percent. It dropped steeply in less than two years, Ingham said.

“It was just a couple of years for the decline, so it’s good to see that number just kind of flattened out,” Ingham said.

For July, there were declines in retail spending based on sales tax rebates for both the year to date and for the month.

Automobile spending was down 1.1 percent for July but up 5.1 percent for the year-to-date figure.

Building permits, which Ingham said are prone to volatility, were up 74 percent for July but down 33.7 percent for the year-to-date.

Single-family home permits were down 25 percent for the month and down 28.9 percent for the year to date.

The average home sale price increased 6.3 percent for the month but declined slightly for the year to date, by 0.1 percent.

Unemployment for the month was up 4.2 percent, with a rate of 7.5 percent, compared to 7.2 percent.

Year-to-date average unemployment was 7.2 percent, an increase of 12.5 percent from the 2009 figure of 6.4 percent.

Payroll employment increased .5 percent for July and .9 percent for the year to date.

Hotel and motel tax receipts were up 3.4 percent for July, but down .7 percent for the year.

Although the index declined for July, a Waco auto sales executive said he thinks things are looking up for the year.

Sales at Allen Samuels Dodge Chrysler Jeep bottomed out last year but are increasing this year, said Ted Teague, general manager at the dealership.

Although sales are not where they were a few years ago, the dealership is beating its current sales targets, he said.

As things get better, sales will only improve, he said.

“Once things take hold, it’s going to be really good,” he said.

bteeter@wacotrib.com

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