During my tenure as director of the Baylor Center for Business and Economic Research I have observed the Waco economy over the last four national recessions, including the current national downturn that is entering its sixteenth month, matching the tenure of the 1981-82 recession and twice as long as the 1991 and 2001 recessions. In prior recessions Waco’s economic downturn lagged the national downturn and has been less severe, and the current recession is no exception.

One reason for Waco’s good fortune is our local banks. When financial giants fell in September 2008, a liquidity crisis emerged that threatened to dry up credit markets. As a result of the financial crisis a new paradigm emerged on Wall Street. At the top this financial paradigm is the replacement of unregulated investment firms with “old school” banks that are subject to oversight and regulation with the backing of federal deposit insurance. Waco is fortunate in that local banks are “old school.” Waco banks have not been engaged in the practice of securitization of mortgage assets or in excessive lending of subprime mortgage loans that characterize lenders in many parts of the country. On Wall Street former executives are looking for a job. But, in Waco financial sector employment is stable and bank credit is available to qualified borrowers.

Waco’s banking sector is not the only factor that shows this area’s relative stability compared to the rest of the state and nation. Waco’s has substantially more jobs in education and health care than the national average, two industries that are relatively stable over the business cycle. Local hospital officials are predicting higher healthcare employment in light of expanding medical facilities along the Highway 6 corridor. Higher education employment is also enhanced by increased enrollment of students that frequently coincides with a slowing of the job market.

The local construction industry has benefitted by remarkably good timing in the approval of public bond issues by the City of Waco, McLennan Community College, Waco ISD, and Midway ISD that support continued growth in construction income. Waco housing sales and single family building permits are lower than a year ago, but March MLS sales were the highest since last September. Housing starts will continue to lag sales but should begin to improve as inventories are reduced.

Although Waco has a higher percentage of jobs in manufacturing than other parts of the country, the manufacturing sector is highly diversified and remains relatively stable compared with many parts of the country. Waco also has not been influenced by the recent decline in the energy industry that has adversely affected other parts of the state.

Retail trade has experienced the loss of retail outlets associated with national chains that have suffered nationwide, but local retailing seems to be holding up relatively well with positive year-to-date unit sales tax receipts. Food stores especially are experiencing a boom in sales with more at home meals and prices that have stabilized over the last several months.

The unemployment rate is probably the most watched single statistic to measure the cyclical performance of an economy. Waco metro area employment growth reported by households has remained positive with some companies that laid-off workers last year beginning to rehire.

Waco’s unemployment rate has been significantly lower than the national average and the State average since 2006, although the gap has recently narrowed. Recent job layoffs have centered on lower wage industries, so that average wage rates per worker have grown at a 4% annual rate. While the March unemployment rate broke through the 6% barrier for the first time, compared with 4.1% in March a year ago, the local economy actually added over 100 new jobs. However, the Waco labor force increased by 2,396 potential workers, attracted by the relative strength of the Central Texas economy compared with other parts of the country.

Although economic indicators may not show a rapid end to the recession following a six-month lag finally reached Texas and the local economy, the bottom line is that the Waco area continues to live up to its reputation as one of the more stable economies in the state and the country.