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April 27, 2018

Volume 40, Number 4

Even as oil and gas production enjoys another resurgence in Texas, the state has issued a positive report on solar powers momentum as a separate energy source.  “The longterm prospects seem as bright as the Texas sun,” said Glenn Hegar, Texas Comptroller of Public Accounts.  And, the cities of Austin and Georgetown were cited as examples of early adopters of the technology.

Ten years ago, Texas’ solar industry was fairly small, but today some believe it’s ready to take on a much larger share of the states energy needs, according to a report by Patrick Graves and Bruce Wright, of the State Comptroller’s office.  How big is the Texas solar industry?

Nearly 8,900 Texans work in the solar industry, in manufacturing, installation, sales, distribution and more,” Hegar noted.  “Our state has 532 solar companies and nearly 100 solar manufacturers.”  Hegar did acknowledge the Texas solar industry is “a relatively small slice of the national industry,” but went on to say “its growing rapidly, driven by improved technology and falling prices.”

Research fellow with the Energy Institute at UTAustin Roger Duncan sayssolar is where wind was 10 years ago and he believes the economics of solar power are as good as wind energy, and maybe better.”

Austin was cited as being at the forefront of using these new energy sources:  “Between solar and its windpower resources, Austin expects to be able to meet more than half of its total needs with renewable energies by 2020,” the Comptroller’s report noted.

It also pointed out nearby Georgetown signed agreements recently that will allow “Georgetowns municipallyowned utility to rely entirely on wind and solar sources.  The city will sell excess power to ERCOT, the states power grid, which will also provide backup power for Georgetown in the event of any shortfall in its power resources.”

To be sure, “there are still unknowns that may rock the industry, including the fate of an important federal tax credit and a recent tariff on foreignmade solar panels,” said Hegar. Read more →

April 13, 2018

Volume 40, Number 2

Dont know if you noticed, but the #2 person in line to become US president spent a lot of time in Austin this past week while the USCongress was in recess.  House Speaker Paul Ryan also hit other cities to preach the administration gospel and raise money.  But, he also participated in a 3day Republican retreat in Austin, discussing politics and policyAll this was before Ryan announced Wednesday he was retiring at the end of his term in Congress.

According to the Texas Tribune (TT), Ryan has just concluded a swing through Texas that included a retreat in Austin with about 100 GOP donors.  Additionally he held fundraisers in Dallas, San Antonio and Corpus Christi.  Along the way, he was promoting new legislation like last year’s sweeping tax overhaul.

The Wisconsin Republican raised almost $4 million with these events – quite a haul.  Where did the money go?  It went to “Team Ryan” — a joint fundraising committee composed of Speaker Ryan and other Republicans running for Congress, reports TT.

Three Texas GOP Congressmen have been publicly targeted for defeat by the Democrats – Will Hurd from Helotes, John Culberson from Houston and Pete Sessions in Dallas.  Some of this money will go to help their re-election.

Make no mistake.  There were a lot of Republican heavyhitters here in Austin, both elected and powerbrokers.  The focus was on elections later this year.  It is somewhat interesting Austin was chosen for this politically-oriented retreat.  After all, Austin leans heavily democratic.  (Apparently, the attractions of our fair city appeal to a wide political spectrum.)

Ryans retreat and fundraisers were private affairs, but he did make a few public appearances, including stopping by the Austin Police Department to thank local officers for their response to the deadly bombings last month.  This rare, high-level GOP concentration in Austin – albeit briefly — brings to mind the enthusiasm powering local Democrats.  As we mentioned two weeks ago, there are three Democratic Party runoffs May 22nd that will determine which candidate will run against local GOP Congressmen Michael McCaul and Roger Williams, as well as, who will contend for the seat left vacant by Lamar Smith, who decided not to seek re-election. Read more →

March 23, 2018

Volume 39, Number 49

Jobs data for the Austin area can sometimes be confusing and contradictory.  One reason is the gatherer/keeper of such stats, the Bureau of Labor Statistics, regularly revises its numbers.  The March 2018 revision changed the Austin areas employment stats from great to even greater.  How about that!  And even before revisions, Austins job growth is the 2nd best performing among the nations 50 largest metros.

The latest figs:  Austin added 36,900 net new jobs in the 12 months ending in January, making Austin the second best performing metro area among the nation’s 50 largest.  Its very strong 3.7% growth is, by far, tops in TexasDallas (up 2.6%), Houston (up 2.2%), Fort Worth (up 2.1%) and San Antonio (up 2.0%) ranking 12th, 17th, 18th and 21st respectively, according to Beverly Kerr, the Austin Chamber’s VP/Research.  This data is not seasonally adjusted.

But look what happens when you adjust the mind-numbing numbers seasonally, taking in a number of factors, including taking into account state and federal unemployment insurance.  In the Austin metros case, the adjusted numbers usually reflect a better economy.

For instance, “preliminary 2017 estimates for jobs in Austin have been revised upward,” noted KerrThe job growth percentages got better – going from previously estimated 2.7% to 3.2% — a significant increase.

When you dive a bit deeper in the numbers, some interesting tidbits emerge.  As an example, Austins sizable government sector lost 2,800 jobs over the past 12 months.  When we say “sizable,” the government sector includes more than 17% of the jobs in the area.  Yet, the job picture grew despite this loss.  Impressive.

So, which portions of the Austin private sector grew?  Darn near all of them.  Professional and business jobs grew by 12,500 over the past 12 months at a rate of 7.4%.  But, manufacturing jobs grew the fastest, at 9.2%, when adding 4,600 jobs.  Only retail lost jobs in the past year – just 200, for a rate of -0.2%.

One aspect of positive economic growth is just now showing signs for even better growth in the very near future.  Get ready for it.  The next oil/gas surge is starting to happen in Texas and this will help state government as well as the overall economy.  Check the next item. Read more →

February 9, 2018

Volume 39, Number 43

Did you know that almost 3 million acres in Texas is foreignowned?  When Texas joined the US, it maintained private ownership of all its lands unlike some states, mostly in the western US, where much of their land fell under federal ownership when they joined the union.  Now, foreigners are buying up much of the bigacreage land in primarilyrural Texas.  This is in addition to foreign interests investing in suburban commercial properties.

This type of development is not normally the focus of this newsletter, but it struck us this is a phenomenon in which you might have an interest, if only as someone who is aware of the larger picture of what is going on around us.  Change is an important discussion about what is happening in Texas and this is another facet of change.

Which foreign entities are buying huge chunks of Texas?  Where are they from?  Which parts of Texas are they targeting?  What is the usage for the land?

East Texas is one of the acquisition targets.  Canadian-owned entities are buying increasing amounts of land in the pine timber region of East Texas.  Tyler County, Newton County and Polk County have the largest acreage concentrations of foreign ownership along with the country of origin for the largest owners.  Also land is being gobbled up in Panola, Nacogdoches and Cherokee counties in East Texas.

The largest acreage holdings, in addition to East Texas, are in South and West TexasHidalgo County in the Rio Grande Valley of South Texas is right up there with East Texas timber counties having the largest concentration of foreign ownership.  Willacy County, to a lesser extent, is on the list from the Valley.  Cropland is the primary usage of the South Texas land.

West Texas?  Briscoe, Culberson, Jeff Davis, Zavala, Nolan, Sterling, Presidio and Reeves counties show up on the list where foreign land owners are concentrated.

Besides Canadians, which countries have the largest Texas holdings?  Germany, The Netherlands, the United Kingdom top the list.  By the way, this is the most current tally, but it is only up-to-date as of 2014.  It should expand when the next report is released. Read more →

January 19, 2018

Volume 39, Number 40

Apple will likely be the worlds first trillion dollar company maybe as early as this year.  It already has its largest presence in Austin other than at its California headquarters.  Apple employs more than 6,500 people in Austin, most housed in a 38acre complex in northwest Austin.  Only its home in Cupertino is bigger.  Now Apple, just this week, announced it plans to spend as much as $30 billion on a second corporate headquarters and for expansion of other work sites in the US.  Chickens should not be counted before they are hatched, but no matter what, this is great economic news for Austin.

Austin has been a part of Apple’s phenomenal growth.  The world’s largest consumer electronics company opened its doors in Austin with about 100 people in 1992.  Apples CEO Tim Cook just a few months ago described to the American-Statesman what Apple workers do in Austin:

“They include customer support, online sales, retail sales, we have our Maps team here, and finance and a huge engineering team that’s growing fast.  Literally,” Cook emphasized, “many, many pieces of our company are here.”  Its 1.1 million sf Americas Operations Center in Austin runs many of its corporate functions throughout the northern hemisphere, according to the Statesman.

For these reasons (and, obviously, others) Austin stands to be maybe the biggest economic gainer of any city in the nation as a result of Apples newlyannounced plans.

Some may think this “will really put Austin on the map” if Apple pumps a healthy chunk of its $30 billion planned investment into the Austin economy.  That thinking is so out-of-date.  Austin IS on the map.  Otherwise it wouldnt be in the position it is visàvis AppleAnd visàvis Amazon, Facebook and Google, all also with large Austin investments.  These three make up the other parts of the Big Four companies pushing hard to be the world’s first trillion dollar company based on valuation (check our story last week).

Oh yeah, Amazon’s 2nd headquarters.  Austin just made the long short list for Amazon HQ2.  This is a big deal.  Now it moves to the next step.  Check out the next item. Read more →

January 12, 2018

Volume 39, Number 39

The formal announcement this week that former City Councilmember Laura Morrison will run against Mayor Steve Adler should trigger spirited discussion about Austins governing policies up until the November election day.  Many of their positions differ dramatically, but the mayor only has one vote out of eleven in Austins CouncilManager form of government.  It could be a good time to explore the possibility of changing to a Strong Mayor form of government called a MayorCouncil.

In the Mayor-Council form of government, under which most big US cities currently operate, the Mayor is paid a full-time salary and takes over most of the functions allocated to a City Manager.  The mayor is the citys CEO and directs daytoday affairs of city departments.  The mayor does the hiring and firing.  And of course, the mayor answers to the voters, unlike the city manager who is hired by the Council.

Based on the 2010 USCensus figures and according to the National League of Cities, Austin is one of only nine of the nations 30 most populous cities operating under a CouncilManager form of government.  The five biggest cities, including Houston, are all governed by a Mayor-Council.

Austin is listed as the 14th most populous city on this list.  And, frankly, it is one of a very few cities that manages and sets policies for three very complicated enterprises an airport, an electric utility and a water utility.  Most cities utilize independent entities to manage one or several of these enterprises, negotiating contracts, etc.  As a result, running Austin is a formidable management task.

The arguments pro and con for the two forms of government have valid points.  The City Manager has too much power.  It’s better for the city to be managed by one who answers to voters, rather than a bureaucrat.  Or the flip side, you need to remove politics from these decisions.  You get the picture.

If a change is made, it would be a laborious process that would need to be put on the ballot by the Austin City Council and approved by the voters – much in the same way the City of Austin expanded to a ten-member council elected by districts and a mayor elected citywide, in 2014.  Frankly, it’s a long shot to happen.  But as the campaign for mayor and other council seats unfold, it will be a good thing to keep in mind for the future direction for a growing city. Read more →

January 5, 2018

Volume 39, Number 38

The final official 2017 tally wont be released for a few more weeks, but after 11 months it is clear the 2016 record number of travelers through AustinBergstrom International Airport (ABIA) will be shattered.  In fact, the 2017 number will easily exceed 13 million passengers in the airport that was designed to handle 11 million.  If the 10+% annual increase continues, its time to examine the status of expansion plans at ABIA.

ABIA officials reported this week that, through November 2017, “the annual passenger mark stands at 12.6 million passengers flying Austin.”  The total in November was 1,229,791 – up 15% compared to the same month the year before.  And the 11-month cumulative was up 11%, to 12,698,792.  All signs point to a continuation of significant increased traffic through 2018.

Recent ABIA users have noticed quite a bit of construction activity during the past year.  But, will the planned increased capacity be complete in time to handle the growing demand?  Start with the fact that the pace is behind the curve as we speak –there are already 2 million more passengers than originally anticipated.  So the answer is “yes” for certain areas of expansion, and “no” for other areas.

Additional parking capacity in the form of a new 6,000space parking garage is on schedule to be completed this year.  This will be a big help.  You can track the availability of parking at www.abiaparking.com.

The biggie though will be the completion of nine more gates at the east end of the current Barbara Jordan Terminal, at a total cost of almost $400 million.  This will increase the number of gates with boarding bridges from 24 to 33, but they wont be completed until 2019.

Yeah, but.  Will this just be a “catch-up?”  What about future growth?  ABIA officials say “the expansion project will increase the airports capacity to 15 million passengers annually.”  Okay, this is all well and good.  But, when do the airport folks anticipate that level of passenger traffic will be reached?  “At least 2025,” is their projection – seven years from now.  We’ll see.

There’s more work underway.  The expansion includes the replacement of three existing gates.  All gates will be able to accommodate domestic airline operations.  Four gates will accommodate international flights.  You get the picture.  It’s a scramble to handle demand. Read more →

November 24, 2017

Volume 39, Number 34

As the Austin area hurtles headlong into the holiday selling/buying season you may have noticed a plethora of Now Hiring/Help Wanted signs plastered all over the area.  This is getting to be a serious situation that could affect the shopping experience of many, not to mention the overall service/retail economy environment.  Just how serious is this situation?  The metro unemployment situation is the tightest it has been in almost 17 years.  Let this sink in for a moment.

Central Texas retailers are moving into their make-or-break time of year.  The yearend selling period is critical to most retailers annual sales success.  And, shoppers also have an impact on eating/drinking establishments, grocers, entertainment venues, and various other establishments that enjoy the spillover of more bodies trudging around the area.  And now, there will be a shortage of workers to assist them

Unemployment figures are not always current, because it takes time to tabulate the results.  But, the most current numbers from October 2017 are close enough to track trends.  Check this impressive unemployment Austin metro trend:  October, 2017, 2.6% … September 2017, 2.9% … October 2016, 3.3%.  This is the best Austin area unemployment percentage since December 2000 when it hit 2.3%.

Although a tight labor market negatively impacts retail, the flip side of the unemployment numbers mean more Austinites have money in their jeans, and given past history, they will spend it, rather than save it.  So, it is up to retailers to overcome staffing problems to service those spenders who come walking into their establishments.  The next six weeks are critical to the Austin retail economy.

The Austin metro is not alone in having a tight labor market in Texas.  In fact, it is not even the best.  The Amarillo and Midland metro areas had the lowest October percentage, 2.4%.  Even College Station/Bryan bested the Austin metro, chalking up 2.5% unemployment, and Lubbock’s metro tied Austin with a 2.6% October rate.

There’s more.  The State of Texas recorded its lowest unemployment rate in four decades, with 3.9% in October 2017.  On top of this, Texas marked 90 consecutive months of annual growth.  The Texas economy is the envy of the nation right now.  And, the Austin metro area is benefitting from what is happening to other Texas metros.  All is good, so far. Read more →

November 3, 2017

Volume 39, Number 31

The future of job expansion/job growth in the Austin area will strongly lie in the field of healthcarethe many facets of healthcare.  The exploding healthcare economy includes all manner of jobs, not just doctors and nurses.  The breadth is impressive.  There are a number of contributing factors, not the least of which is UTAustins Dell Med School and associated development.  But, theres more, much more.  In fact, this is part of a national trend, strongly bolstered by the Austin areas alreadyestablished economic leadership.

Healthcare growth is here and on a fast track, both at the upper and lower ends of the pay scale.  It’s happening.  Bank on it.  (Sure, if Amazon HQ2 picks Austin, it will have a dramatic job impact.  But Amazon HQ2 is not a certainty – healthcare growth in all its facets is a near certainty).  The strong tech job base in the Austin area is a contributor, as is higher education.  Look below at these national trends, keeping in mind Austin’s economic strengths.

Nationally, the US Bureau of Labor Statistics (BLS) projects health care and social assistance is expected to become the largest major sector by 2026.”  This sector will account for about one-third of all new jobs.

Want detail?  BLS notes “healthcare support occupations will grow more than 23%.  Healthcare practitioners and technical occupations will increase more than 15%.  This is what we mean when we mention the breadth of healthcare. Other examples include personal care aides, home health aides, etc.

Auxiliary jobs will expand exponentially in the Austin area because of the core healthcare emphasis here.  Remember, Dell Med did not exist a couple of years ago, admitting its first students in 2016.  It is fledgling in its existence and will only grow in impact.

As we’ve reported many times in the past, the Austin area enjoys major advantages by being in Texas.  But, according to the Texas Medical Association, Texas ranks 47th in physician to patient ratio.  In fact, the state has often recruited foreign medical graduates to fill shortages.  So the need is great, and the opportunity to expand to meet the need is almost limitless.  Austin and Texas have a big advantage to attract med students:  becoming a doctor here is a financial bargain.  We’ll examine this aspect, as well as other supporting info behind the claim that healthcare jobs are the wave of Austin’s future, in the next item. Read more →

October 27, 2017

Volume 39, Number 30

You often hear some Austin oldtimers lament the many changes theyve seen.  Even those whove lived in the Austin area for only 5to10 years sing much the same tune about changes theyve witnessed.  Of course, most US cities have experienced at least some degree of change, whether for better or worse.  But where does Austin rank in a thorough study of the 50 largest US metros?  Using nine elements of data not just the number of construction cranes Austin has changed the most over the past decade.  One element may surprise you.

 MagnifyMoney, a subsidiary of LendingTree, analyzed home prices, crime rates, building permits, commute times and other elements to identify areas of high metropolitan change, and gave each city a “Change Score” of zero to 100.  The highest change score was 90.4 (Austin) and the lowest of the 50 metros was 61.1 (Birmingham, AL).  Let’s examine some highlights.

Austin is a magnet for change, with the fastest job growth in the nation (+40% since 2006), 60% of residents moving since 2010 and a 54% rise in house prices since 2006, the most of the 50 metros ranked,” reported MagnifyMoney.  None of these high percentages should come as a surprise to those who have been paying attention.  So which cities follow Austin’s top “Change Score” ranking?

“#2 DallasFort Worth (89.7 score) is in the top ten for five of the change categories:  employment, recent moves, building permits, house prices and crime rate.”  D/FW’s crime rate is down 43% from 2006.

#3 Houston (86.2) rounds out the trio of big Texas cities at the top of the change list, led by housing factors.”  Houston ranked #2 for house price appreciation and #3 in the US for building permit expansion.

Even though this study was the most recent – released within the last ten days – it is a “change” study for a snapshot in time, 2006-2016.  The dynamics of these cities almost ensure they are changing as we speak.  Another point:  “change” can be seen as good or bad, depending upon your perspective.

Now, for what may be considered a “surprise:”  Austin did not rank in the top five in change in Commute Times.  San Francisco, +18% … San Jose, +18% … Los Angeles, +12% … Boston, +12% and Portland, 12% took the honors in this study.  Wonder what it is today. Read more →