By Steve Stackhouse

Things were tough all over during the Great Recession. Now that there’s more economic optimism in the air, it’s worth taking a look around the country to see how individual states are faring. It turns out that Texas tops the charts, with the highest number of jobs added since 2008.

Research by ON NUMBERS, crunching U.S. Bureau of Labor Statistics data, found that just four states have not only regained all the jobs they lost to the recession but have actually added employment on top of the baseline. Texas is one, along with Alaska, Louisiana, and North Dakota. The stats show that Texas is now ahead by nearly 140,000 jobs, and boasts a jobless rate that’s a full percentage point better than the national average.

So what’s up with Texas? For one thing, Texas offers a friendly business environment, according to Larry Gigerich, managing director at Ginovus, a site selection and incentives consulting firm. The state’s “excellent business climate has created more opportunities for Texas to compete for projects,” he explains.

A similar assessment comes from David Brandon, senior vice president at Site Selection Group in Dallas. “Texas has continued to prosper economically in comparative terms,” he says. Like most other places, the state continues to experience some ups and downs, he notes, but its overall trend is good, bolstered by strength in a number of desirable economic sectors, from energy to healthcare to technology.

Strong, Diversified Industrial Sectors “Clearly, one sector with a great tradition in Texas is energy,” Brandon says. That in itself is nothing new — after all, they’ve been drilling for oil there for more than a century now, and the state’s refineries are national leaders in both crude production and refining. A major twist that’s driving the sector now, though, is new technology opening up oil and natural gas mining within the state’s major shale formations. Hydraulic fracturing combined with horizontal drilling is allowing energy companies to tap into deposits that were previously out of reach, and the result is the creation of thousands of Texas jobs. Texas also leads the nation in wind power generation and has the world’s two largest wind farms — and it’s also prime real estate for solar power generation, with enough solar energy shining on each acre of Texas land every year to equal 800 barrels of oil.

Brandon also sees growth in manufacturing. A lot of cost-sensitive but labor-intensive manufacturing happens along the border with Mexico, but great manufacturing stories are being reported all over. Advanced technology and manufacturing are thriving, led by top-notch research facilities and many thousands of workers experienced in technology disciplines. This, too, is really nothing new — Texas was the birthplace of the integrated circuit back in the late 1950s.

“You’ll also find tremendous and continuous growth in health services,” Brandon says. The state’s biotechnology sector generates an estimated economic impact of $75 billion each year, with thousands of firms working in biotech manufacturing, research, or testing. Additionally, more than 25,000 high-tech firms lead the state to prominence in information and computer technology — including such household names as Dell and Texas Instruments. And, Brandon points out, defense remains a strong sector, too. The state has 15 active military bases plus a continually growing aerospace and aviation sector that provides work for more than 200,000 people.

Gigerich adds more highly active sectors to the list, including corporate offices, financial services, contact centers, and data centers. “I think these sectors will continue to do well, and as the population of the state continues to grow, distribution and logistics will become more important.”

The Dallas suburb of Richardson provides a good example of the explosion in data centers and cloud computing. About a dozen data centers are there now, and four or five more are in the works. Across the Dallas area, cloud computing could create as many as 24,000 jobs in the next few years, according to a recent study conducted by IDC.

Gigerich notes that the Lone Star State is gunning for businesses that have historically enjoyed prominence on the West Coast. “Texas has been very aggressive in trying to attract California companies,” he says. “In particular, information technology and financial services companies view Texas as a very attractive location for new and/or expanded facilities. In addition, contact centers — due to the bilingual population — and manufacturing have been key sectors looking to expand into Texas.”

Texas Success Stories
Positive news headlines have been in rather short supply in many U.S. places, but not so in Texas. Check out a small sampling of the recent job-creating developments that have helped put the state on top of the list of employment growth. What’s particularly striking about this list is the diversity of the projects, from automotive to aerospace to energy to customer support.

• In March, Apple Inc. announced plans to double its presence in Austin, pledging a $304 million investment and promising to create as many as 3,600 jobs in customer support, sales, and accounting over the next decade. According to company spokesman Steve Dowling, Apple had less than 1,000 people on its payroll in Austin back in 2004 and had already grown the headcount to 3,500 before the new announcement.
• Automotive supplier Continental Automotive Systems unveiled plans in February for a $113 million investment at its Seguin manufacturing plant. Continental is part of a German company and plans to make automotive sensors there, creating work for about 300.
• A $200 million General Motors stamping facility will create about 180 jobs in Arlington. The plant will turn out SUV components. That January announcement follows a $331 million, 110-job expansion announcement about a year ago at the Arlington Assembly Plant.
• Anadarko Petroleum Corp. is building a 31-story tower at its headquarters in The Woodlands, roughly matching another tower already on the site. According to Brandon, the company has plans to add 450 to its payroll.
• The state’s excellent wind-power resources helped it land a $210 million, 150-job commitment from WindData, a renewable energy data company. The company last November announced the five-building data center in Pflugerville — a complex that itself will be powered by the wind.
• Boeing is moving 300 to 400 jobs to a San Antonio facility that handles aircraft maintenance, modification, and support work. Perhaps the best-known plane that will get its maintenance needs met in Texas now is Air Force One.
• Bell Helicopter is pumping $230 million into its corporate campus, revitalizing it and consolidating North Texas facilities. A new headquarters is part of the plan, along with an employee center and a new corporate training facility.
• A $100 million, 750-employee announcement comes from GE Transportation in Fort Worth. The company plans a state-of-the-art locomotive manufacturing plant there. Adjacent to that site, the company announced a similar-sized investment to build a plant to produce electric-drive wheel systems for large off-road vehicles. About 130 jobs are promised through that project.
• Kohl’s, the prominent department store chain, picked the Texas community of DeSoto for a massive e-commerce distribution hub. It’ll cover about a million square feet and fuel some 400 jobs when it opens.

To these happy headlines, Gigerich adds impressive growth involving Charles Schwab in Austin and Oracle Corp. in Dallas-Fort Worth.

Why Texas?
Many a state would be green with envy at the diversity of businesses that share hopeful futures in Texas. So what makes the outlook so positive? It certainly helps having massive volumes of energy beneath the soil and in the air, waiting to be tapped. And while the presence of such resources could be seen largely as a matter of divine intervention or good fortune that has little to do with human efforts, the truth is that shale gas in Texas and elsewhere might still be seen as untouchable if not for the innovations of George P. Mitchell — a Texan.

Beyond the state’s penchant for innovation, Brandon cites an environment that welcomes business activity with open arms. “Texas has an independent and conservative business tradition, and is committed to promoting business opportunities,” he says. That’s not a political statement, either, as pro-business attitudes can be found on both sides of the aisle in Texas.

Among the welcoming attributes, the state has been working on its legal system in an effort to ensure it’s fair to all, including businesses. For example, 2011 reforms include several geared toward discouraging frivolous lawsuits.

Then there’s the fact that things in Texas tend to be Texas-sized — “the sheer number and wealth of options are extremely appealing,” Brandon says. “There’s a broad variety of work force choices, from unskilled hourly labor to extremely skilled technology and corporate professionals,” he explains.

Gigerich rattles off a similar list of positive attributes that help drive Texas growth: “great tax structure; bilingual work force; large population; different markets that can offer different types of settings for companies (urban, suburban, and rural); affordable labor costs; outstanding road, air, and rail infrastructure; and good quality of life.”

Just to expand a bit on one of these key points — there’s no corporate income tax in Texas, and no individual income tax, either. At the state level, there’s no property tax. If you’re thinking the sales tax must therefore be through the roof, think again. Some states have lower sales tax rates than Texas, but the rate is a fair amount more in other states.

As for the work force, it’s about 12 million strong, marked by a variety of industry-specific concentrations in different regions. That makes it easier to find the right workers. And, as anyone in human resources knows, finding properly skilled labor is not always easy, even with the higher unemployment rates that the recent recession brought.

Texas is a prime address for conducting international business, with exports that continue to grow explosively. Consider that they were $163 billion in 2009, $207 billion in 2010, and $250 billion in 2011. Exports grew by 20.7 percent last year, and the state’s share of America’s export picture hit 16.9 percent, up two whole percentage points since 2008. For the 10th consecutive year, Texas has been the nation’s top exporting state, according to the U.S. Department of Commerce. The top export industries last year were petroleum and coal products, chemicals, computer and electronic products, non-electrical machinery, and transportation equipment.

What makes it a great place for connecting globally? For one thing, its dozen deepwater ports include the port of Houston, second-busiest in the country and 13th-busiest in the world. More evidence of global-business friendliness includes the recent ranking of the Alliance Foreign-Trade Zone as the nation’s top general-purpose foreign-trade zone. The most recent figures available cover fiscal 2010, when the FTZ admitted more than $4 billion in foreign products, more than any other general-purpose FTZ (it’s the fourth time in the past five years that Alliance has grabbed that ranking).

One more thing worth mentioning: Though the state is marked by an independent streak that strives to keep government out of the way of business success, the public sector remains there to help when needed. The list of incentive programs and financial assistance for expanding businesses is long and generous.

For example, there’s the Texas Enterprise Fund, a “deal closing” fund that is the largest of its kind in America. For projects that promise significant job creation and capital investment, the fund is able to step in and sweeten the pot to ensure that Texas is super-competitive with other jurisdictions.

Then there’s the Texas Emerging Technology Fund, which helps those doing business in Texas to recruit top research talent, then migrate innovative ideas from the lab into the marketplace. Add in generous financing options, valuable grants, and attractive incentives and you’ll see why a lot of organizations are ranking Texas among the nation’s best places to do business.

Americans for Prosperity-Texas Director Peggy Venable commends Texas Comptroller of Public Accounts Susan Combs on the agreement with Amazon.

“It is good news for Texans that an agreement has been reached with online sales giant Amazon over collecting sales taxes.

“We are pleased that Amazon has decided to return to Texas. Texans and the Texas economy will benefit from the additional sales collections as well as Amazon’s commitment to hire 2,500 people and invest $200 million in the state.”

Venable said "This is good news for Texas. We at Americans for Prosperity commend Comptroller Combs for her good work and are excited to have Amazon back in Texas."

Austin Business Journal

Small business owners in Texas have maintained a positive outlook for their business prospects during the last six months, with 53 percent affirming the position in a recent survey by the American Express OPEN Small Business Monitor.

Texan business results were slightly lower than those in general in the South, as small business counterparts in the region showed 58 percent were optimistic. However, Texas had a higher percentage of employers who planned to grow their businesses — 81 percent, up from 62 percent last fall — than those in the South or nationwide — 69 percent and 81 percent, respectively.

Also during the next six months, 59 percent of Texas small business owners said they will make capital investments, and 39 percent plan to hire more employees. That compares to 45 percent and 30 percent, respectively, last fall.

Austin remains strong in the small-business realm, ranked No. 1 in the South for having the healthiest small-business climate thanks to strong growth in population, private-sector jobs and small businesses, according to an On Numbers list.

The survey also showed that more than one-third of Texas entrepreneurs believe the nation is still in a recession, while another third say the economy is recovering.

More than two-thirds of Texas business owners said the economy “stresses them out.”

Providing good customer service has helped small businesses survive the tough economy, according to 98 percent of those who responded. To set themselves apart from their competition, 79 percent said they would put a heightened focus on serving their customers.

The survey has been released each spring and fall since 2002, and is based on a nationally representative sample of small business owners of companies with fewer than 100 employees.

Sign up for the ABJ-E news blast email to stay on top of business intelligence news for Central Texas’ entrepreneur community.

By Bill Bowen

Employment and wages rose faster in Texas than in the nation during the 12 months that ended in September, according to a new report by the Bureau of Labor Statistics.

Wages in Texas rose 6.2 percent in the 12-month period, compared with 5.3 percent nationally, says the bureau’s Quarterly County Wages and Employment Report.

Employment rose 2.7 percent in Texas, compared with 1.6 percent for the country, according to the report. Dallas County recorded 2.7 percent job growth in the 12-month period, while Collin County had 3.6 percent growth and Tarrant County grew 3.1 percent.

The report looks at the total number of jobs filled in each county and state and at the average wages by county and state.

Harris County, home to Houston and the oil industry, boasts the highest average wage in Texas, at $1,156 a week. Dallas County was second, with $1,102. Collin County was third ($1,038), and Travis County fourth ($1,010).

Of Texas’ 254 counties, all but 27 had wages below the national average. Texas also had three counties ranked among the five lowest-wage counties in the nation: Cameron ($591), Hidalgo ($602) and Webb ($629), all of which are near the Mexican border.

Wages in Dallas County rose 6.4 percent during the period, making it 59th in the country. Wages were up 6.7 percent in Denton County, 3.6 percent in Tarrant County and 4.2 percent in Collin.

Nationally, the counties with the highest wages were: Santa Clara , Calif., with an average weekly wage of $1,857; New York, N.Y. with $1,647; Arlington, Va., with $1,550; Washington, D.C., with $1,527; and San Francisco, at $1,457.

By HILARY HYLTON

The debate over what has come to be called Obamacare moved into the eye of a political storm last week as the U.S. Supreme Court weighed the law’s constitutionality. With its civilized tone, the legal discourse was akin to the calm in the center of a hurricane. But at the periphery of the same storm, a multitude of other legal fights are sweeping through federal courts across the country, evidence of the tumultuous relationship between conservative states and the federal government. Some of the strongest winds are blowing out of Texas, a state with a passionate independent streak and a long history of conflict with the federal government.

Some 26 state attorneys general lined up against the Obama Administration on the health care law. Among them was Texas Attorney General Greg Abbott, 54, who has made his state a leader in the fight against what he sees as overweening federal power by bringing some 23 lawsuits to federal court, an unprecedented number even for Texas. Abbott, a former Republican Texas Supreme Court justice, has challenged the feds on issues ranging from voter ID to women’s health care, and from clean-air rules to contraception coverage. Last week, Abbott was in Washington to observe the oral arguments on health reform and tweet his impressions: “[Justice Anthony] Kennedy said #Obamacare changes the historic relationship between gov’t and individuals,” he observed, clearly pleased.

(PHOTOS: Supreme Court Health Care Protests in Pictures)

But while the attorney’s thumbs were atwitter, his office back in Texas was pushing out a press release trumpeting a legal victory involving another example of what Abbott calls “unlawful overreach” by the Obama Administration — in this case, the Environmental Protection Agency. With the Supremes dominating the news, a ruling by the U.S. Court of Appeals for the Fifth Circuit in New Orleans in favor of Texas made few headlines beyond the state. The judges found that the EPA had acted “arbitrarily and capriciously” in rejecting Texas permit standards for regulating pollution at energy-producing plants under the Clean Air Act. The judicial panel ordered the EPA to take another look at the standards and act “expeditiously,” chiding the agency for taking over three years to act when the statutory deadline was 18 months.

“Showing seemingly no regard for the federal laws that govern what it can and cannot do, the EPA unlawfully disapproved a commonsense Texas air permitting program that fully complied with the federal Clean Air Act and reduced harmful emissions,” Abbott said in a midweek press release. “The EPA disregarded the limited authority it was granted under federal law and incorrectly alleged that Texas would not act sensibly and in accordance with its own laws.”

“Texas has such a long and prickly relationship with the federal government,” says Cal Jillson, a political scientist at Southern Methodist University. In the decade after the state joined the Union in 1845, Texans were vocal in their criticism of Washington for failing to protect the border with Mexico and for not aiding with the fight against Indians on the frontier, says Jillson. Then, following the discovery of vast offshore oil reserves in the 1930s, the state battled the federal government to retain control of its reserves. Dubbed the “tidelands controversy,” the epic battle culminated in 1953, when Congress recognized Texas’ rights under its Annexation Agreement, an issue on which President Dwight D. Eisenhower had campaigned and promised to settle to the satisfaction of Texans.

(MORE: Will Obamacare Stand? Reading Justice Kennedy, the Supreme Court’s Swing Vote)

Those wounds are still raw in Texas. Abbott’s 18 lawsuits largely enjoy public support, including from Republican governor Rick Perry, a man who, like Abbott, has his fingers on the pulse of the traditional Texan zeitgeist. But while Perry sports cowboy boots emblazoned with Texas revolutionary slogans and sprinkles his Tea Party speeches with references to the 10th Amendment — and even secession — Abbott has taken his fight to the legal arena. Described by the Dallas Morning News in a 2010 profile as having a “folksy charm” but casting a “polarizing shadow,” Abbott is widely believed to be setting the stage for a run at the governorship, maybe even challenging Perry if he seeks another term in 2014.

Confined to a wheelchair since age 26, when a storm-damaged oak tree fell on him as he jogged through Houston’s posh River Oaks neighborhood, Abbott has gained a reputation as a tenacious and skilled lawyer. In 2005 he won a case before the U.S. Supreme Court that allowed Texas to continue to display a monument citing the Ten Commandments on the state capitol grounds.

Jillson and other Texas political observers see Abbott’s legal challenges to the Obama Administration as both emblematic of the Texas spirit and a sure sign of his ambitions for higher office. Both Perry and Abbott view the “Obama Administration and the federal government as interfering with the state’s prerogatives at every turn,” Jillson says. Overreach is a term that appears in press release after press release issued by the offices of both Perry and Abbott.

In his latest lawsuit, filed in late March, Abbott is trying to prevent the federal government from cutting off Medicaid funds to the Texas Women’s Health Program following the state’s move to cut Planned Parenthood from the program. Texas claims that the Planned Parenthood clinics serving the program, which do not provide abortions, are not sufficiently separated from the clinics that do provide them. The Centers for Medicare and Medicaid Services did not respond directly to the lawsuit, but the agency’s director issued a statement saying that “patients, not state government officials, should be able to choose the doctors and health care providers best for them,” and noted that the Bush Administration turned down a similar request from Texas in 2005.

(SPECIAL: What Health Care Reform Really Means)

The lawsuit opened some old political wounds within the Texas Republican Party when U.S. Senator Kay Bailey Hutchison, the Dallas Republican who was handily defeated by Perry in the 2010 primary battle for governor, came to Planned Parenthood’s defense. “I do think that the governor needs to sit down with the federal government and work it out so that we can have our share — our fair share, not more — of money for Medicaid to help low-income women have their health care services,” Hutchison told MSNBC’s Chuck Todd. “We cannot afford to lose the Medicaid funding for low-income women.” Perry has pledged to replace the federal funds with state money.

Democrats like state representative Garnet Coleman of Houston view the Medicaid funding brouhaha as another of Abbott’s “frivolous lawsuits,” while Perry hailed it as another attempt by Texas leaders “to carry out the will of the people.” But beyond the lawsuits over health care, contraception coverage, various EPA regulations and others, there is one fight that may bring the U.S. Supreme Court front and center again in a crucial battle between the states and the federal government.

Abbott has launched what some critics believe to be a frontal assault on the Voting Rights Act (VRA), landmark legislation passed in 1965 that gave the federal government oversight of elections in primarily Southern states with a history of disenfranchisement of blacks. The VRA has been amended and renewed four times, but the latest extension, in 2006, prompted a congressional debate over the necessity of continuing some of the law’s provisions in what some see as the new, integrated South. In early March, the U.S. Department of Justice rejected Texas’ newly enacted voter ID law — under the VRA, Texas is one of several states subject to federal review when amending its voting laws or drawing new lines for its congressional districts. Two days after Texas got the word from DOJ, Abbott amended his court filing objecting to the DOJ response, directly challenging the VRA. Abbott’s filing stated that the VRA, as amended in 2006, “exceeds the enumerated powers of Congress and conflicts with Article IV of the Constitution and the Tenth Amendment.”

(MORE: Health Insurance Is for Everyone)

Some observers, like University of California election-law expert Richard Hasen, say this challenge may equal the health reform suit in potential impact. Hasen, author of the Election Law Blog, predicts that the Supreme Court, based on an 8–1 ruling in a 2009 case that seemed to recognize change had come to the predominantly Southern states subject to the VRA, may be open to reconsidering parts of the law. Hasen says the high court may also be open to taking the Texas voter ID case and ruling before the November election.

“Texas, throughout its history, has been wary of any outside imposition on its autonomy,” Jillson says. “It’s like Russia and the Cold War — the tension between Texas and the national government.” And while “Obamacare raises the hair on the back of their necks,” as Jillson says, Abbott and Perry are after plenty of other targets.

By Patrick Danner

A rebound in government hiring last month pushed Texas' unemployment rate to the lowest level in three years.

Texas' unemployment rate improved to 7.1 percent in February, down from 7.3 percent in January and 8 percent in February 2011, figures released Friday by the Texas Workforce Commission show.

It's the sixth straight month the state's jobless rate has fallen. It's the best rate since March 2009 when it was 7 percent.

“Things are going well in Texas, and I think we'll continue to see the unemployment rate go down,” St. Mary's University economist Steve Nivin said.

Meanwhile, the San Antonio area's unemployment rate dipped to 6.8 percent from 6.9 percent in January, the Federal Reserve Bank of Dallas reported. The rate was 7.3 percent in February 2011.

The Texas Workforce Commission determined the state's nonfarm workforce increased by 27,900 in February. Ohio was the only state to add more jobs — 28,300, according to the federal Bureau of Labor Statistics.

The state revised the number of jobs created in January in Texas. The state added 67,700 jobs in January, an increase of 500 jobs over what was originally reported.

Texas has gained 273,900 jobs over the 12 months ended Feb. 29, more than any other state. New York posted the second-biggest increase — 141,300, BLS data indicated.

“Texas may continue to be one of leaders” in job growth, Nivin added. “But I also suspect that as things start to improve around the country, it will equilibrate a little bit, and we may not be the first or second in growth ... as other states' economies start to pick up.”

The government sector added more jobs, 12,800, than any other in the state last month, snapping a string of seven straight months of losses. For the year ended in February, government has shed 57,900 jobs — the most of any sector.

The trade, transportation and utilities industry, which includes retail jobs, added 8,300 jobs in the state last month. The sector has added more jobs, 68,300, than any other in the 12 months ended Feb. 29.

Construction registered a solid month, adding 4,500 jobs in the state in February.

The figures are adjusted to remove the effects of normal seasonal changes.

The Fed reported the number of people employed in nonfarm jobs in the San Antonio area reached a seasonally adjusted 861,100 in February, up 500 over January. The Fed also made an upward revision in the number of jobs added in January, from 7,400 to 7,800.

San Antonio's unadjusted employment rate was 6.8 percent for February, down from 7.3 percent in January, state figures show. Nivin expects the rate will fall into the low 6 percent range by the end of the year.

The area posted an increase of 6,300 nonfarm jobs in February, according to the Texas Workforce Commission. Area job figures reported by the commission are not seasonally adjusted.

“More employers are loosening up some of their (open) positions that they've been holding on to for a while,” said Patrick W. Newman, Workforce Solutions Alamo's executive director. “Looking at the economy and how it's improving, especially in our area, (employers are) saying, ‘OK, I'm not going to fill 10 positions, but I might fill five of them.'”

Government jobs accounted for 3,700 of the jobs added last month in the San Antonio area. Newman attributed the increase to public school hiring.

The leisure and hospitality sector added 1,800 jobs last month, perhaps reflecting hiring by hotels and local attractions in preparation for spring break visitors.

Construction also was a bright spot with the addition of 1,000 jobs.

The financial activities sector lost 700 jobs last month, more than any other. Trade, transportation and utilities lost 500 jobs.

The mining and logging sector, which includes oil and gas, was flat last month, the commission reported.

The state revised the number of jobs lost in the San Antonio area in January to 7,400, down from 7,800.

pdanner@express-news.net

Gov. Rick Perry, back from the campaign trail, returned to a familiar theme in a speech today lauding Texas' business-friendly climate as the nation's next high-tech hub of innovation.

Perry was speaking in Austin at the Angel Capital Association Summit to a group of investors. He bragged on the state's low taxes and regulations and the tort reform initiative he spearheaded, saying these factors create the perfect environment for companies looking to grow.

"These steps we've taken, combined with the bold and visionary nature that has always defined Texans, have our state positioned to become the nation's next high-tech hub, a center of innovation, collaboration and competition for the next wave of all technology development and manufacturing," Perry said.

The governor also praised one of his own economic development programs, the Emerging Technology Fund, which has drawn criticism for lacking transparency and for "crony capitalism." The fund is government money used to subsidize companies and technology start ups. Some owners and investors in those companies are major Perry campaign contributors.

"I know I don't have to tell you all the value of those sorts of companies, but I'm proud to say our portfolio is already worth more than the sum of our original investments," Perry said. "We're creating a culture that will help ensure that great ideas that are born in Texas stay in Texas from the laboratory to the marketplace."

The fund has invested more than $169 million in 133 early-stage companies throughout the state. Six of these companies have failed, with three others cited for failure "to continue commercialization efforts," and three others said to be out of funds.

Perry also credited the fund with attracting some of the top researchers to Texas, and added that within the next 30 days the state will be announcing a major researcher coming to Texas.

By Kirk Ladendorf

Austin's puny job recovery over the past two years will accelerate into faster job growth this year and next, economist Angelos Angelou said in his 26th annual forecast event Thursday.

The CEO of Angelou Economics forecast 45,000 new jobs will be added to Austin's five-county metro area in 2012 and 2013, more than doubling the job expansion of the past two years.

Austin added 12,800 jobs last year, and its growth rate of 1.7 percent trailed other major cities in Texas and the state as a whole, which expanded jobs by 2.3 percent.

The drivers for a stronger economy, Angelou said, will be venture-backed startups, a resurgence of established tech companies, an increase in new residents moving into the region from elsewhere and a stronger real estate development sector.

Austin's economy, Angelou said, is getting its groove back.

"I am optimistic about the forecast because I believe we had a significant recovery in the high-tech sector last year, which will continue. We had a 7 percent increase in our number of high-tech workers, expanding to 101,000 last year," Angelou said. "That is substantial. Those increased payrolls are going to kick in this year and next."

"Venture capital seems to be doing fairly well, and if those trends continue, we should see more small companies being formed. And people are continuing to move to Austin. Population growth last year generated about $1.1 billion to our total personal income."

Those new jobs, Angelou predicts, will drive the local unemployment rate down to 5.6 percent in 2013 from its current rate of 6.3 percent. He forecasts the population will expand during the two years by 88,000 to reach 1.84 million by the end of 2013.

The forecast calls for 14,500 single-family home starts during 2012-13 along with the construction of 8,000 new apartment units. It also calls for increased construction of office space, industrial space and retail space as occupancy rates continue to rise.

Angelou also is bullish on the rise in Austin's entertainment events, including continued growth for the South by Southwest festivals, the Austin City Limits music festival and the city's first Formula One auto race, which is scheduled for November.

"We are going back to being a high-tech town, a fun place to be and a great place to live and do business," he said. "Formula One is going to provide a lot to this region over time, and it will be very successful."

The eventual impact of Formula One could reach $500 million a year to the local economy, Angelou estimated.

Angelou, who runs an economic development consulting business, has been giving Austin economic forecasts since he was hired as an economist with the Greater Austin Chamber of Commerce in 1984.

Angelou's forecast usually has tracked the economy fairly closely over the years. He missed in 2009, the worst year of the latest recession, when he forecast weak growth of just over 2,000 jobs, and Austin instead recorded a net loss of more than 16,000 jobs.

While Angelou was upbeat about the local outlook, Jay Bryson, managing director and global economist for Wells Fargo Securities, gave a more guarded outlook about the national economy.

Low interest rates and strong business balance sheets in the United States should promote more growth, but the economy may be constrained by consumers' focus on paying down their debts, Bryson said.

Wells Fargo expects the nation's gross national product adjusted for inflation will expand by 2 percent this year, which is slightly better than the 1.7 percent growth recorded last year.

Continued low interest rates and strong business balance sheets will enable growth, but the key remains how much of their income consumers devote to spending versus paying down past debts.

Bryson said the United States faces a few big risks, including rising oil prices, which could slow down consumer spending, and the deep problems of dealing with heavy government deficits both in Europe and this country.

The European financial crisis still poses a substantial threat to banks in Europe, he said. If the European debt situation is not worked out, it could cause a "major disruption" for the European financial system, which could lead to tighter credit in the U.S.

"Europe is not over yet and is not going to be over for awhile," Bryson said.

Continued heavy deficit spending in the United States probably won't create an economic crisis in this country this year, but he said the issue needs to be addressed by politicians in the next 18 months or risks could rise dramatically.

Business people who are expanding, Bryson said, should consider not only the best-case economic scenario, but how well their business plans would hold up against those major economic risks.

"Caution is well-advised," he said.

kladendorf@statesman.com; 445-3622

Predicted job growth, 2012-13

Industry New jobs % growth

Education/health services 7,200 7.9%

Leisure and hospitality 7,000 8.1%

Retail trade 6,900 8.2%

Professional services 5,700 5.2%

Construction 4,400 11.3%

Other services 2,800 8.1%

Financial activities 2,800 6.5%

Manufacturing 2,600 5.4%

Government 1,700 1.0%

Wholesale trade 1,700 4.2%

Transportation 1,200 9.2%

Information 900 4.7%

Source: Angelou Economics

By ENRIQUE RANGEL

AUSTIN — Thanks to a rebounding economy, the Economic Stabilization Fund grew from $5 billion to $6.1 billion since last year, according to the state’s chief revenue estimator. And if this robust growth continues, by the end of Fiscal Year 2013 the savings account should grow to $7.3 billion, a 19.7-percent increase.

“The Texas economy has rebounded from the recent recession,” John Heleman of the Texas Comptroller’s Office told the House Appropriations Committee on Tuesday, the first time the budget-writing panel met since the Legislature adjourned in late June.

The fund gets its revenue from oil and gas taxes and thanks to high energy prices in recent years, it replenishes quickly after the Legislature taps into it. This was the in last year’s session when the lawmakers covered a $3.4-billion deficit for the fiscal year ending on Aug. 31.

In addition to the growing fund, the state has added 440,000 jobs since December 2009, which means Texas has regained the 433,000 jobs it lost during the 2008 recession, Heleman said.

The state has weathered the economic downturn better than the rest of the nation thanks also to rising new car sales and more consumer spending, but “we still have a ways to go,” Heleman cautioned lawmakers. The housing market and the construction industry, although not hurting as much as in other states, have not returned to pre-recession levels, he said.

The state budget already has a $4.1-
billion gap because in last year’s session the Legislature did not appropriate enough money to cover expenses for Medicaid and other programs, John O’Brien, director of the Legislative Budget Board, told the panel.

“We told you that the Medicaid shortfall would be about $4.3 billion,” O’Brien said referring to last year when the board last advised the lawmakers. “Our newest estimate is $3.9 billion.”

The cost of fighting last year’s wildfires and health care expenses for prisoners should be added to a supplemental bill to cover the Medicaid program, O’Brien advised the committee. If that’s the case, the estimated gap for the current biennium should be $4.1 billion.

Heleman, O’Brien and officials from the State’s Auditor’s Office updated the committee on the state of the Texas economy because, like other legislative panels, Appropriations is taking on the interim charges House Speaker Joe Straus and Lt. Gov. David Dewhurst have been assigning since mid-
October.

Interim charges are critical issues lawmakers examine the year before the Texas Legislature is in session.

As was the case last year when the lawmakers tackled a $27-billion budget shortfall, another massive revenue gap, possibly as much as $15 billion, is projected for the 2013 session.

Encouraged by the Rainy Day Fund report, some Democrats in the committee suggested a special session to restore some of the more than $5 billion in school funding the Legislature cut in last year’s session.

“In my view, this should be addressed right now,” said Rep. Sylvester Turner, D-Houston, vice chairman of the panel.

“Some children are hurting, why can’t we use that funding now?” asked Rep. Helen Giddings, D-Dallas. “I think we ought to have a special session on that.”

However, so far Gov. Rick Perry and leaders of the Republican-dominated Legislature have ignored all calls for a special session.

“I don’t think it’s a good idea,” Rep. John Smithee, R-Amarillo, the dean of the Texas Panhandle/South Plains delegation, said in reference to such calls.

Only the governor has the authority to call a special session and it cannot last more than 30 days.

“We don’t want to be locked into a sense of security because we still have a lot of uncertainties,” Smithee said. “The schools have learned to work within their means and I’d rather wait until we are back in (regular) session to know how much revenue we’ll have to work with.”

The 140-day session starts on Jan. 8, 2013.