Ray Perryman: Economic forecasts of Texas metro areas
Metropolitan areas across Texas have regained most of the jobs lost due to COVID-19. While growth that would have otherwise occurred has been foregone or at least delayed, the long-term outlook remains quite positive.
More than three fourths of all jobs across the state are currently found in the state’s seven largest metropolitan areas, a proportion which has been rising steadily over time. Through 2045, the Houston and the Dallas areas will likely each account for approximately one fourth of net new jobs, with the greater Austin, San Antonio and Fort Worth regions each contributing between 8% and 9% of the total gain.
The fastest-growing metropolitan centers as measured by percentage changes in jobs are expected to be those with significant concentrations of energy activity (though some of these are coming back from steep initial declines and lingering vestiges of COVID-19), including Odessa (up by a compound annual 1.90% per year through 2045), Midland (1.87%), San Angelo (1.85%) and Tyler (1.81%). These smaller MSAs are projected to equal or exceed the most rapidly expanding large metro areas (such as Dallas-Plano-Irving with 1.85% annual growth and Austin-Round Rock-Georgetown with 1.80%).
Employment in the Fort Worth-Arlington-Grapevine division is likely to increase at a 1.68% annual pace, while El Paso is projected to experience modest job growth through 2045 at a rate of 1.55% yearly.
The Houston-The Woodlands-Sugar Land MSA economy has recently struggled due to sluggish recovery in the energy sector, but these problems are likely to resolve over time. Employment in the area is expected to expand at an annual rate of 1.74% through 2045.
The McAllen-Edinburg-Mission MSA is projected to see 1.76% annual job growth through 2045. The San Antonio-New Braunfels MSA economy’s expansion pace is likely to be maintained, with employment anticipated to rise at a 1.70% yearly rate over the period.
Texas’ smaller metropolitan areas are also projected to enjoy notable gains over time. As mentioned, areas with significant energy activity are projected to see particularly strong job growth as the industry recovers from pandemic-related demand decreases and other issues. Sherman-Denison (1.73%) is also expected to outpace the state rate of expansion. Most of the other smaller MSAs are predicted to advance by 1.50% or more through 2045.
While residual effects of the coronavirus and the emerging omicron variant may cause issues in some areas over the next few years, Texas metropolitan areas are likely to see notable long-term expansion. The largest population centers are projected to generate the highest numbers of net new jobs, but several smaller metros will likely keep pace in terms of relative increases. There are challenges to be sure, but the overall prospects are quite encouraging.
Economist Ray Perryman is president and CEO of the Perryman Group, an economic research group and analysis firm based in Waco.
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