Moderator Dr. Paul R. Gowens, Texas State professor of economics, stood at the podium at last week’s San Marcos Area Chamber of Commerce (SMACC) program about the economy. Waiting to speak, from left to right, are Keith R. Phillips, Senior Economist for the Federal Reserve Bank of Dallas, David Beckworth, macroeconomist and assistant professor of economics at Texas State, and James LeSage, Fields Endowed Chair in Urban and Regional Economics at Texas State. Photo by Mary Dichard.
By MARY DICHARD
A panel of economists met at the San Marcos Conference Center last Thursday to discuss the state’s financial climate.
The views turned up few surprises. To summarize: Texas has not been hit as badly as much of the country, but it remains that local fortunes are ineluctably tied to the global economy. The national economy is in its worst rut since the Great Depression of the 1930s and it could get worse before it gets better, though it should get better sometime around the start of 2010.
Keynote Speaker Keith R. Phillips of the Federal Reserve Bank of Dallas in San Antonio said Texas can expect more job losses in 2009. Layoffs would most likely come from the technology and energy sectors. The Texas workforce may decline this year by 3 to 3.5 percent, or 318,000-371,000 jobs.
But not all the news was bad.
“Texas never really got out of whack in major areas,” Phillips said. “Housing markets are in much better shape in regards to prices.”
Phillips said home prices in Florida and California dropped 20 percent Phillips said Texas is not declining as fast as the nation and that, in general, the state is holding up well, even though this year may bring some unpleasant change.
If the road to recovery remains smooth, many forecasters have agreed that a turnover can be expected in the economy by the beginning of 2010.
“The U.S. economy has historically been very resilient,” said David Beckworth, macroeconomist and assistant professor of economics at Texas State. Since 1900 the economy has grown annually at 3 percent, with the exception of the Great Depression.
Among the possible pitfalls on the road to recovery, Beckworth said, is a possible further slump in the global economy due to a weakened Western Europe and economically stressed Eastern Europe. Beckworth said some countries in the European Union have contemplated returning to their own currencies.
“There are a lot of potential issues in Europe,” Beckworth said. “They buy a lot of exports.”
Another possible problem, said Beckworth, is that China has acquired $1.5 trillion dollars in dollar assets and could cause a run on the dollar. He also noted that the Chinese Premier has called for a new reserve currency.
“It was enough to make us effectively nervous,” said Beckworth. Further topics of concern were issues in U.S. mortgage-backed securities, commercial paper, and other asset-backed securities.
More locally, James LeSage, Fields Endowed Chair in Urban and Regional Economics at Texas State, noted that Austin ranks second in the nation’s patenting growth.
“Texas imports innovators,” said LeSage, who added that innovators start businesses and create jobs.
Amy Madison, director of Economic Development San Marcos, agreed that local innovation helps to buttress the local economy. Madison added that Texas State’s growth is a key factor locally. Texas State has enrolled record numbers of students this year and now is the fifth largest university in Texas.
“Innovation is a driver to the economy, and it’s very apparent here in central Texas,” said Madison. “Texas State is providing the intellectual capital and our local entrepreneurs are taking that and are churning out jobs as a result.”
Said San Marcos Mayor Susan Narvaiz, urging confidence, “Our country is a strong country. We have a long history of recovery. Don’t have that hunker down mentality. Try to use local vendors as much as you can to keep the community strong. We need to support each other. We need to invest and re-invest in our community.”