Presented by: Steve Nivin, Ph.D., St. Mary’s University Please contact Steve Nivin with any questions or comments at snivin@stmarytx.edu or 210-517-3609.

PAST, PRESENT, AND FUTURE OF THE CENTRAL

TEXAS ECONOMY

PRESENTED TO:

SEGUIN ROTARY CLUB

Presented on: October 11, 2016

Business cycle index shows slowing growth across most major metropolitan economies.

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Source: Federal Reserve Bank of Dallas

Major metros experiencing slowing growth in employment, while Houston is seeing declines.

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

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Employment growth in San Antonio dipped to 1.72% in August but still second strongest growth among major metro areas.

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

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Employment growth in San Antonio fell below the long-term trend in July.

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

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Avg. Annual Growth = 2.39%

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Most sectors still showing growth in employment, but it is slowing across almost all sectors.

Source: BLS; Federal Reserve Bank of Dallas; Calculations by Steve Nivin, Ph.D.

Most metro areas have seen slight increases in unemployment rates in the past few months including San Antonio.

Source: Bureau of Labor Statistics; seasonal adjustment by Federal Reserve Bank of Dallas

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However, unemployment rates are still historically relatively low.

Source: Bureau of Labor Statistics; seasonal adjustment by Federal Reserve Bank of Dallas

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Unemployment rate in San Antonio is third lowest among major metropolitan economies in Texas.

Source: Bureau of Labor Statistics; Federal Reserve Bank of Dallas

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With the exception of El Paso, other major metros have seen increase in inventories. Mostly due to regular cycle except in Houston.

Source: Texas A&M Real Estate Center

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Single-family home inventories are still very low indicating strong housing markets.

Source: Texas A&M Real Estate Center

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Sharp increase in house prices in Texas and most major metro economies since 2012.

Source: Texas A&M Real Estate Center; calculations by Steve Nivin

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Exports have seen a sharper decline in Texas relative to U.S. There has been an even sharper decline in San Antonio.

Source: U.S. Census Bureau; International Trade Administration; calculations by Steve Nivin

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Energy industry in Texas is starting to stabilize, but production in Eagle Ford area continues to decline.

Source: Baker Hughes

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Texas leading index may be indicating decline in growth across the state may be stabilizing or turning around over the next 3-6 months.

Source: Federal Reserve Bank of Dallas

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2016 Forecast Update

¨  Employment growth of 2.25-2.75% ¤  Growth of 22,300 to 27,300 jobs

¨  Unemployment rate at 3.4-3.7% ¨  Continued low oil prices, slow global growth, and tight labor markets

causing growth to slow, as predicted at beginning of the year. ¨  Forecast remains the same, but… ¨  Reasonable chance for employment growth below 2.25% and

unemployment above 3.7% by end of year. ¨  Risks to forecast

¤  Low oil prices ¤  Slowing growth around the world

n  Brexit ¤  Strong dollar ¤  Uncertainty of presidential election ¤  Tight labor market

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Thank you

Questions?

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