M. Ray Perryman

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Various measures have been instituted by the government to help reverse the downward trend the nation’s economy has been experiencing over the past year or so.

Among them are the $787 billion stimulus package of tax cuts and spending programs, along with the more than $4 trillion the government has set aside for use through the Troubled Asset Relief Program (TARP), the Federal Reserve, and the Federal Deposit Insurance Corporation (raising total commitments over the past 20 months to approximately $12.8 trillion). Some $1.2 trillion has also been designated to enable the Federal Reserve to purchase long-term government debt and increase the acquisition of mortgage-backed securities from Fannie Mae and Freddie Mac.

The success of these efforts will undoubtedly vary, but their implementation has sparked an upward tick in consumer confidence, and there are some signs that the economy may be stabilizing. Of course, the ongoing employment decreases continue to add significant stress, and are prolonging concern within families across the country. Since the recession began in December 2007, more than 5 million workers have been displaced.

Actions such as the stimulus efforts will take some time to work their way through the system, and it is likely that the nation’s economy will see rather modest growth until momentum for recovery picks up, perhaps toward the end of this year.

Texas has been fortunate to escape the full brunt of the recession, but recent signs have been pointing to the fact that the difficulties so many states have been experiencing are now beginning to take root in the Lone Star State. The robust economic and employment growth so prevalent over the past year has, in many areas of Texas, begun to slow—in some cases, considerably.

Over the past five years, some 1.1 million new jobs were created in Texas. During the first two months of 2009, however, the direction has reversed. More than 102,000 Texans have lost their jobs, with particularly notable losses in the professional and business services and construction. On the other hand, job growth is being achieved in education and health services, the government sector, leisure and hospitality, and mining and logging operations. Still, the overall pattern of job decline is likely to persist for the next few months.

Across the state, the housing market is experiencing the effects of the nationwide recession, with a slowdown in sales and construction. Moreover, Texas manufacturing continues to contract, and exports, though still running higher in Texas than in any other state, are not keeping pace with the growth observed in recent years.

Still, there are many positive signs for better days ahead for the economy, particularly in the anticipated triangle of population growth delineated by Houston, San Antonio, and Dallas-Fort Worth, where job expansion will gradually occur. Waco, located in the heart of this region, is poised to experience economic growth once the national downturn subsides, albeit of a rather modest nature until momentum resumes.

Over the next five years, the Waco Metropolitan Statistical Area (McLennan County) is expected to experience a population gain of approximately 13,800 people. During this same period, some 8,350 new jobs are projected to be created. The increase in employment, which represents a 1.45% compound annual growth rate from 2008-2013, will likely be widespread across numerous industrial sectors. Most of the growth will occur in the period after mid-2010, as moderate losses are presently being observed.

Other key economic indicators point to ongoing growth for the Waco metro, with real gross product climbing at a 3.71% yearly rate (compared to the 3.87% growth rate anticipated for the state). Real personal income (by place of residence) is projected to achieve a 4.05% per annum growth rate, and retail sales is expected to experience a 6.68% yearly expansion to reach some $4.88 billion by 2013. Again, the pace will accelerate as the recovery gains a foothold.

The Texas economy will undoubtedly receive significant enrichment from the American Recovery and Reinvestment Act recently established by law. It is estimated that the State government will receive some $16 billion, with individuals, small businesses, and local governments also receiving substantial amounts. It is not yet known how effective this influx of money will be in helping create jobs, improve education, or reform operations and procedures, but the effects will be notable. If used appropriately, they will both bridge the current downturn and set the stage for enhanced competitiveness going forward.

Texas is well positioned for growth, with a business-friendly climate and large workforce. Waco, located in the midst of anticipated growth corridors and transportation linkages, is poised to participate in future expansion.