According to analysts, the Austin area’s economy is prepared to blossom in 2022 and beyond after overcoming the devastating effects of the coronavirus pandemic over the previous year and rebounding robustly.
They said the region’s diversified and increasing base of employers, trained workforce, and acclaimed quality of life will fuel major increases in the future, speaking at an economic forecasting event sponsored by the Austin Chamber of Commerce on Wednesday.
Joe Quinlan, a Bank of America managing director who spoke remotely from his New York office to the local business leaders in attendance, stated, “You should be extremely thrilled with the prognosis” heading into 2022.
Quinlan described Austin as having “a really appealing backdrop for more expansion.” “You’re recruiting individuals (and) corporations” to the metro area, he says.
An Austin-based economist, Jon Hockenyos, who also spoke on Wednesday, described the Austin area as “in the early phases of a growth explosion.”
The coronavirus pandemic has prompted changes in company processes and labor preferences, which have “only reinforced the things that made us the (economic) star we were,” according to Hockenyos. “I am convinced that Austin will be one of the great worldwide cities of the twenty-first century.”
Both he and Quinlan stated that the national economy has been rebounding from last year’s pandemic-induced collapse and that it appeared to be on track to continue growing in 2022.
Quinlan forecasts a 4% increase in the United States’ gross domestic product — the total value of all products and services — next year, which is considered a strong increase.
The Federal Reserve predicts a 3.8 percent increase in US GDP next year, following a 5.9 percent increase this year as the US continues to recover from the pandemic. During the initial shock of the epidemic, the US economy declined by 3.5 percent in 2020, as measured by gross domestic product.
Quinlan and Hockenyos didn’t give a prediction for increase in the Austin-area gross domestic product next year, but both believed it will outperform the national total.
Economic Ramifications For Austin
The continued housing crisis, the congested transportation network, and the more stretched workforce are anticipated to be the key limitations on the Austin-area economy in the next years, according to Hockenyos.
“The two great screaming issues are housing and labor force,” he said. “We’re in risk of pricing our employees out of being able to live within walking distance of their workplace.”
He also stated that “a significant number of people in Austin remain unemployed” because they lack the necessary training to benefit from the region’s economic boom — or to assist ease the high demand for skilled labor among Austin-area firms.
“We’re abandoning them,” Hockenyos added. “We need to invest in that asset, which will make the foundation here much stronger in the long run.”
The Austin economy has largely recovered from the pandemic-induced slowdown in recent months, according to a range of indicators.
More people are working in the metro area than ever before, a record number of local job postings are being published online, and the region’s unadjusted unemployment rate is at a low 3.5 percent – a value regarded to be at or below normal churn.
According to the Federal Reserve Bank of Dallas, the Austin metro region has recovered all of the estimated 140,000 jobs it lost during the initial shock of the epidemic early last year as of July. Furthermore, job growth in the Austin area has been picking up speed, with an annualized rate of 10% in the third quarter of this year – a net gain of 28,505 jobs — compared to a combined 4.9 percent growth rate in the first and second quarters.
A number of important corporate developments in the region have enhanced the local business climate over the last 12 to 18 months.
Tesla is one of them, with a $1.1 billion manufacturing facility under construction in Travis County and the company’s headquarters moving to Austin last month. In addition, electronics giant Samsung has said it is exploring sites in Austin and Taylor for a $17 billion semiconductor facility, software giant Oracle has named Austin as its new headquarters, and Apple’s $1 billion office tower on West Parmer Lane is still under development.
Tesla’s acceptance of the region has been especially significant, according to Hockenyos, because it has put Central Texas on the map as a prospective location for other high-tech firms.
“A lot of people in and around that industry are looking at Austin right now because Tesla is such a signal company,” he added. “Tesla has delivered a message to sophisticated manufacturing companies: come in, the water’s OK in Austin.”