Panel discusses Google Fiber, Dell Medical School, employment
The Greater Austin area will continue to thrive in 2014, according to one economist.
Angelos Angelou delivered his 29th annual economic forecast Dec. 12.
He predicted that Austin would add 57,000 new residents and about 29,000 new jobs in 2014, and have a 4.8 percent unemployment rate by the end of 2015.
“In fact, Austin is a national phenomenon, much like a gangly teenager waking up in a growth spurt that overnight adds inches to our height,” he said.
After the forecast, Angelou Economics hosted a panel of experts who discussed major projects and upcoming challenges.
National and state trends
The U.S. added 2.2 million new jobs and had a 7 percent unemployment rate in 2013, he said.
Angelou said consumer confidence is stagnant and that the national debt is now more than 100 percent of the U.S. gross domestic product.
“We are pushing the envelope with unpredictable consequences for our economy and the global financial markets,” he said.
He went on to say that the median household income is the same as it was in 1995 and that most of the jobs that have been created nationally this year have been part time.
Texas has outperformed several states and the national average, Angelou continued.
The Lone Star state added 530,000 residents and 301,000 new jobs in 2013. It also had a 6.2 percent unemployment rate.
“Nationally, we are about 2 million jobs behind the prerecession levels. Texas is [ahead] by 573,000 new jobs,” he said. “This year the performance of the Texas labor market outperformed the national [market] in almost every segment.”
Austin in 2013
In 2013, the Austin metro area added 54,700 people, roughly 27,200 new jobs and had a 5 percent unemployment rate, he said.
It also had $27.2 billion in retail sales, Angelou reported.
He said the city’s main economic drivers included its entrepreneurs and its tech, real estate and entertainment sectors.
Venture capital spending totaled $518 million in the past 12 months—about $100 million less than in 2012, he said.
Angelou said software, semiconductors and information technology services dominated Austin’s venture capital funding scene.
“Investing in the innovation remains the key to Austin’s prosperity in the future,” he said.
Austin’s high-tech industry added 5,000 new jobs in 2013 for a total of roughly 120,000 jobs in the field.
Austin’s real estate market remains strong, he said. Angelou mentioned several major construction projects, including new hotels and condominiums.
Vacancy rates have reached record lows, he added. Rates for office, industrial and retail spaces are less than 10 percent, 8 percent and 5 percent, respectively, he said.
“I cannot find any Realtor who will not tell me that homes are being bid up in Austin,” he said. “You cannot buy anything at asking price; you have to bid it up sometimes 5, 10 or 15 percent.”
Angelou said major events such as Austin City Limits, South by Southwest Conferences and Festivals and the U.S. Grand Prix have generated an estimated $800 million annually for the local economy.
Austin in 2014 and beyond
He said Austin’s economy would experience “good, solid growth” in 2014 and 2015. Austin will add 28,900 jobs in 2014 and 30,400 jobs in 2015, he said.
“One thing for certain is that even my most optimistic forecasts have been conservative because the actual numbers have always come in higher,” he said.
In two years, Angelou estimates that Austin’s metro area will add 150,000 people, bringing the area’s population to 1.98 million.
Austin’s population will double to 4 million people by 2040, he predicted.
Angelou envisioned that Austin would become more eco-friendly and densely populated, and add more education and transportation options—a vision he summarized as “green cities grow up.”
“If our story ends in sprawl and excess, we will have missed a tremendous opportunity to demonstrate how American cities, with creativity and technology, can grow up in ways that are healthy and sustainable,” he said.
Catherine Morse, general counsel for Samsung Austin Semiconductor LLC, said the company employs 2,600 people and contributes $2.2 billion annually to the Central Texas economy.
Samsung expects to keep the same number of employees for the first part of 2014 but hopes for growth in the second part of the year, she said.
Hugh Forrest, director of the SXSW Interactive conference, said that in 2013, SXSW generated $218 million of economic impact, or 35 percent of a Super Bowl’s impact.
He said that ever since Twitter launched at SXSW in 2008, attendees have searched for “the next Twitter” each year.
Author Jason Dorsey said that Generation Y is splitting into those who are taking a more traditional career and family path and those who are underemployed and not gaining traction in the job market.
He said these two groups are growing apart as they age, and understanding this split is important when considering how to serve both groups for everything from government services to transportation.
Dorsey said many Generation Y members want to live near where they work and would use public transit if convenient.
Mark Strama, head of Google Fiber Austin, said the U.S. pays more money for slower Internet connections compared with other countries.
He added that he did not know what innovations will come from high-speed Internet access but that he has become as accustomed to using Google’s high-speed video conferencing as most people are to their mobile phones.
Greg Hartman, president of external affairs at Seton Healthcare, said The University of Texas may announce the new dean of the Dell Medical School in Janaury. Seton will break ground on the medical school in September and the teaching hospital in October.
The panel debated Austin’s challenges, such as affordability and staying competitive. John Garrett, CEO and publisher of Community Impact Newspaper, moderated the discussion.
Panelists agreed the city has shortage of trained workers, especially in the high-tech fields.
“If your city has low unemployment, that’s a good problem to have,” Forrest said.