The Tyler economy will thrive in coming years, outpacing both the nation and the state in growth, income and employment levels, economist Ray Perryman said Thursday.
Keynoting the Tyler Area Chamber of Commerce’s 33rd Annual Economic Outlook luncheon, Perryman said Tyler “is a great place to be right now.”
“The health care industry is thriving, Tyler is becoming a destination place for retirees, and you have strong retail and restaurant sectors,” Perryman said. “And you’re blessed in having very strong leadership.”
The Tyler metropolitan statistical area, which includes all of Smith County, should see an annual growth rate of 4.46 percent, Perryman said. That’s well above the national average, which is projected to be 2.96 percent, and the state average, which he pegged at 4.11 percent.
The difference between 3 percent growth and 4 percent growth is dramatic, Perryman said.
“Look at the U.S. economy,” he said. “When you’re talking about an $18 trillion economy, 1 percent growth means $180 billion. That’s a lot of economic activity, and that’s a lot of jobs.”
THE COMING YEAR
With the presidential election out of the way, Perryman told the sold-out crowd, markets are more and more comfortable with the idea of a Trump administration.
“Markets don’t like uncertainty,” he said. “In fact, markets would rather have bad certainty than uncertainty. And Mr. Trump doesn’t have a history, so no one knows what to expect. And he makes statements that sometimes contradict each other.”
Still, the markets are looking at his consistent statements about reducing regulation and cutting business taxes.
The markets are also looking at the clear, consistent policies of House Speaker Paul Ryan.
“Paul Ryan has a very clear agenda, and it includes a lot of things that are good for investors and good for businesses,” Perryman said. “He talks about less regulation and a better business tax structure. And the markets are counting on that now.”
And that’s why Perryman expects increased growth for the nation in the coming year.
“We just ended the 75th straight month of job growth,” Perryman said. “We haven’t done that since we came out of the Great Depression and went into World War II. What that says is we’re trucking along. We’re not setting the world on fire, but I don’t see anything out there that will put us in a recession.”
He said there are some threats, however.
“Recoveries don’t die from old age; they die from us doing something stupid, or outside forces,” Perryman said.
One outside force that could disrupt the economy is a cyber-attack.
“We’re vulnerable there,” he said. “We’ve seen health care records hacks and we’ve seen financial sector hacks.”
TEXAS AND TYLER
Perryman pointed out that he’s been doing these presentations for 35 years (33 of them in Tyler). He said there are sharp contrasts between the Texas economy in the 1980s and now.
“There’s been a lot of talk about the Texas miracle [on growth and job creation] - and the numbers are true,” he said. “But the real Texas miracle is what’s happening now. In 2015, we gained 165,000 jobs. In 2016, when the final numbers are in, it will be around 200,000 - and that’s in the middle of an oil bust. Last time we had an oil bust, we lost hundreds of thousands of jobs. This time, we’re just not growing quite as fast.”
The state’s greatest economic strength is its exports, he said.
“One out of every $7 that leaves the U.S. in trade comes from Texas,” Perryman said. “We’re about 8 percent of the U.S. economy, and about 15 percent of U.S. trade. We make a lot of the stuff people in the world need.”
Texas has overtaken California in international shipping. With the widening of the Panama Canal, and the state’s central location, more shipping from Asia is coming through Texas now.
“We doubled container capacity, so we’re very well set up for that,” Perryman said. “That’s one of the reasons we’re now growing, even though there’s an oil bust.”
And the state has greatly expanded its health care sector.
“In 11 of 12 Texas regions, health care and biomedicine is the No. 1 industry,” Perryman noted. “In Houston - the international capital of the energy industry in the Western Hemisphere - the No. 1 employer is biosciences.”
That’s true in the Tyler MSA, he added.
“When you look at Tyler area, you saw a little bit of a slowdown last year,” Perryman said. “But on the whole, things are very positive. There are new facilities in the health sector, a lot of positive new alliances, and a lot of really good things happening in the area. You’re doing a lot of things right. And it’s also it’s a great place to be.”
And that’s important in retaining the quality graduates that come out of the area’s colleges and universities.
“You’ve got to be a place people want to live,” he said. “You’re going to graduate some great folks from UT-Tyler. You’ve got to keep them here. We’re going to be a knowledge-based economy, and these are the folks you need.”
But there are some areas of concern, Perryman warned.
The first is the Texas Legislature. Lawmakers can’t continue to put off solving some of the state’s toughest problems.
“I know the session just opened,” he said. “So get on the phone with your legislators. We need to fix the education system, we need to fix the foster care system and we need to fix infrastructure.”
In response to a question from the audience about the federal debt, Perryman said the problem is real but not at a crisis point yet.
“It’s big,” he said of the federal debt. “It’s about $20 trillion in round numbers. We don’t have a catastrophic situation, which would be when no one would hold your debt. We’re not facing that because we’re the world’s definition of politically stable. We have contention elections, but what always happens is that we have the election Tuesday and we go to work on Wednesday. We don’t overthrow the government or blow things up. We are the go-to in the world for having a stable government.”
Still, Congress needs to get serious about fixing deficit spending, he added.
“We can’t fix it overnight, but there are things we could do to start,” Perryman said.
He cited Social Security and other entitlements in need of reform.
“Those are the kinds of things we have to do,” Perryman said. “It’s hard, when you’re a politician, because you work for the only entity that doesn’t go to jail for printing money. It’s hard to say no to people.”
Still, he added, the economic outlook for the Tyler area is positive.
“We predict Tyler will grow faster than the state as a whole,” he said. “That’s saying something. It’s pretty strong. We’re very positive about the future of the area.”