|WACO, March 29 - Itís no secret that the Texas economy has been, continues to be, and will remain one of the strongest in the nation.
While the Lone Star State was not totally spared the recent national downturn, we didnít fall as far and we came back faster and stronger than almost anywhere else. While I am a native son of this great state, these are not empty, braggadocious words.
The state and its metropolitan areas are showing up regularly on lists of best places for jobs and economic growth. One of the latest indications of Texasí relative strength is the 2012 Governorís Cup, which is awarded by Site Selection magazine (a leading publication in the area of economic development and corporate real estate strategy). The Governorís Cup goes to the state with the highest number of capital investment projects that are either $1 million in size, create 50 jobs, or involve 20,000 square feet of new space construction.
In 2012, Site Selection tallied 761 such projects in the Lone Star State, with 2011 winner Ohio a distant second at 491. Rounding out the top 10 were Pennsylvania (430), Michigan (337), Illinois (322), Georgia (296), North Carolina (280), Tennessee (231), Virginia (199), and Kentucky (196). A number of Texas towns also made the list of top communities for locations and expansions. This award is the most high profile, but Texas has also been at or near the top in dozens of other rankings in recent months.
One of the reasons for success is the stateís business-friendly attitude, with a relatively low tax burden, right-to-work status, and a predictable regulatory environment. We are also benefitting from strong energy sector activity, with shale plays encouraging a large volume of capital investment. In addition, the stateís economic development policies have been crucial in securing a number of these locations, with some of the largest receiving funds from the Texas Enterprise Fund or the Texas Emerging Technology Fund.
In addition to the statewide efforts to attract new business activity, virtually every community across the state has its own entities working to ensure future prosperity. These endeavors take many forms: city and county departments or personnel, chambers of commerce, economic development corporations, regional planning groups, private-sector initiatives, public-private partnerships, and more. These local entities are essential to the process.
We donít look for Texasí strong relative performance to stop here. Starting from the trough of the recession in December 2009, Texas has added 821,500 net new jobs, about twice the number that was lost during the downturn. Growth is stemming from long-time sources of business activity as well as emerging industries, and the result is likely to be ongoing expansion at a pace most states will envy.
In our most recent forecast, we call for output (real gross product) growth over the 2012-2017 period at a 4.66 percent rate, while employment expands by 2.28 percent (a gain of more than 1.35 million net new jobs). This is significantly better than the United States as a whole, with growth in real gross product during the time frame at a 3.47 percent annual rate and employment expansion at a 1.47 percent pace.
Texas remains well-positioned to outperform the United States economy for the foreseeable future. The 2012 Governorís Cup is one of several weíve been awarded over the past few years, and I daresay it wonít be the last. Of course weíll have our business cycles, but if they work out like the last one, the Texas economy will be more stable through the downturn and faster on the upswing. The only major threat to the stateís momentum is if we fail to take care of basic essentials (such as infrastructure, water supplies, and education). As long as we make progress on these fronts, thereís every reason to believe that Texas will stay on top.
Dr. M. Ray Perryman 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.