Much of the economic activity in Texas occurs within the state’s largest metropolitan statistical areas. These urban centers are the primary leaders in business and trade for individuals and companies across the state, though smaller population centers and rural areas still make a significant contribution.
As a group, the state’s largest metropolitan areas account for 74.8 percent of employment in the state and 80.3 percent of output. Through 2040, more than eight of every 10 new jobs are expected to be in one of the seven largest MSAs in Texas.
Moreover, the major MSAs comprise about 84.5 percent of growth in the economy (as measured by expansion in real gross product).
While the Austin-Round Rock MSA economy has slowed to more sustainable levels of growth, the area still remains one of the top performers in the state and continues to attract national attention.
The area is expected to continue its strong performance over the forecast horizon, led by expansion in the services, durable manufacturing, and information sectors.
The Austin area is projected to see a $154.8 billion increase in real gross product by 2040, expanding by 3.63 percent annually. Over 627,600 new jobs are likely to be added, which represents a 2.02 percent annual growth rate.
The Dallas-Plano-Irving Metropolitan Division has been performing very well, adding 67,900 jobs during the 12 months ending in October, which was the largest increase in the state.
Expansion should continue to be steady, as employment is expected to increase by 1.45 million over the 24-year period, a 1.87 percent annual growth rate. The largest gains in employment are projected in the services sector, with an addition of nearly 923,300 jobs representing a 2.49 percent growth rate per year.
Through 2040, the area’s real gross product is forecast to increase by 3.49 percent annually for an added $451.8 billion in the local economy.
The Fort Worth-Arlington Metropolitan Division has largely recovered from previous struggles due to slower activity in the oil and gas industry, which impacts the nearby Barnett Shale and the companies that have located or expanded in the area in recent years.
The Perryman Group’s most recent long-term forecast for the MSA indicates growth at rates well above the nation as a whole and similar to the state, with the area’s output (real gross product) increasing by $139.4 billion by 2040, growth of 3.29 percent per year. Employment is expected to expand by nearly 492,700 jobs, representing an annual growth rate of 1.63 percent.
The largest output gains will be in the durable manufacturing and services sectors.
The El Paso MSA has been experiencing steady expansion over the past two years, with annualized employment growth rates ranging from 2 percent to more than 3 percent each month.
The area is projected to see growth on par with the state average, though slightly less than the other larger MSAs. An increase of $29.7 billion in real gross product by 2040 is projected, for a 3.12 percent annual growth rate. The Perryman Group’s forecast also projects an expansion of employment at a rate of 1.69 percent yearly (for a gain of more than 176,400 jobs).
The durable manufacturing and information sectors are expected to see the largest percentage growth in real gross product.
The Houston-The Woodlands-Sugar Land MSA is recovering from loss of productivity due to Hurricane Harvey and should easily return to steady expansion over the long-term horizon, though the costs of the storm will make an impact in the short term. Through 2040, real gross product in the Houston area is forecast to grow 3.27 percent yearly, for a total gain of close to $546.1 billion.
Employment is expected to increase by close to 1.6 million to reach 4.7 million, an annual growth rate of 1.74 percent. The most significant job gains in the area are projected to be in the services sector, with employment expanding by 2.37 percent annually.
The McAllen-Edinburg-Mission MSA has experienced modest employment growth over the past year, thought its unemployment rate at 5.7 percent remains one of the highest in the state. The Perryman Group’s most recent long-term forecast projects that the area will add nearly 140,300 jobs through 2040, a 1.75 percent annual growth rate.
Real gross product is forecast to expand at a 3.18 percent annual rate for a $19.9 billion increase. Employment in the services sector is expected to rise by 2.4 percent annually and the durable manufacturing and services sectors are projected to grow at a rate of over 4 percent.
The San Antonio-New Braunfels MSA economy has been experiencing solid performance in employment, as the area experienced the highest rate of growth out of the larger MSAs over the past year (2.9 percent).
Through 2040, the San Antonio-New Braunfels MSA is forecast to see real gross product increase by $118.7 billion, which represents a 3.27 percent annual rate. Employment is expected to rise at a 1.74 percent yearly rate, generating an addition of over 550,300 jobs. The services sector is expected to show significant employment gains of 2.36 percent yearly, which translates to an increase of over 352,000 jobs for the local economy.
The state economy is continuing to recover from the dampened activity during the slump in the oil and gas industry. Much of the economic prosperity in Texas originates in its major MSAs, a trend that is only expected to increase.
Despite inevitable business cycles, the Texas population centers will likely see relatively solid performance through 2040 and beyond.
Dr. M. Ray Perryman of Lindale is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.