la Frontera In the News

Austin American-Statesman

November 27, 2003

Waco economist's forecast is bright for Williamson

Growth in sales in employment, higher salaries predicted in coming year

by Laura Heinauer, American-Statesman Staff

A Waco economist forecasts salary increases, a rise in retail sales and employment growth in many Williamson County industrial sectors for the coming year.

Ray Perryman, director of the Perryman Group, predicts a 6.3 percent growth in gross product output, a 3.4 percent increase in employment and 6.4 percent growth in retail sales through 2004.

In 2003, gross product output grew by 4.4 percent compared with the previous year, while employment went up 1.6 percent and retail sales increased by about 4.8 percent, he said.

The county shouldn't expect the kind of growth it experienced during the late 1990s, Perryman said, but he characterized the overall economic outlook as "very positive."

"The main thing that strikes you about Williamson County and other fast-growing areas in the state is the incredible potential they have," Perryman said. "They're the ones who will be getting the higher-end residential and retail, combined with some industry."

He compared Williamson to counties bordering such large cities as Dallas and Houston.

"Williamson County is one of the top counties in the nation in terms of growth," he said. "I don't think the California Legislature could mess it up."

During the recent downturn, sales tax figures remained steady or even continued to increase in parts of the county, Perryman said.

In the coming year, Williamson's growth will be buoyed by continued strength in the trade and service industries, with a slow but steady increase in the manufacturing sector, thanks to Toyota.

In the past couple of months, numerous companies connected to Toyota's new San Antonio truck manufacturing plant have been kicking tires in several North Austin suburbs.

"Once the investment kicks in, like it's starting to now, the state is going to come back very rapidly both because interest rates are so low and because there's this sort of pent-up demand." Perryman said. "There are a lot of people who bought a lot of things in 1999 that need are starting to need to be replaced."

Jon Roberts, managing director of the Austin-based business and economic development consulting firm TIP Strategies, said 6 percent growth in retail sales sounded aggressive but certainly wasn't out of the question.

He said Dell Corp. posted good sales numbers last quarter, strongly signaling a possible turnaround in the information technology industry. Continued progress toward construction of Texas 130 in the eastern part of the county should also spur continued investment there.

Retail sales leakage to Lakeline Mall in Austin continues to be a concern for city officials in Cedar Park, Roberts said. However, that shouldn't hamper growth in the rest of the county, he said.

"Six percent is certainly not a prediction any one of us would have made a year ago," he said. "But I wouldn't bet against it. I think Williamson County is probably as well positioned as any county in Texas."

Perryman's projections come from an economic model he created, made up of statistics from about a dozen business and governmental agencies, including the U.S. Department of Labor, the Texas Workforce Commission and the U.S. Census Bureau.

Perryman also compiles data from various developers, manufacturers and retailers across the state.

"A lot of it's numbers, but it's also talking to people, trying to get a street sense," he said.

Harry Gibbs, a commercial real estate agent based in Georgetown, said the new Wal-Mart supercenters, H-E-Bs and Home Depots popping up around the county should help sales tax revenues in the coming year.

With the arrival of the new Simon retail shopping center in Georgetown, city officials there hope to create a situation similar to Round Rock's La Frontera shopping center, which draws customers and sales tax revenue from outside the city, Gibbs said.

The new retail center, he said, will probably cause some shifting in the tenant mixture on the square in downtown Georgetown as some of the older stores close. He is currently searching for someone to fill the Gold's Department Store space.

"The local hardware store, the inexpensive clothing stores, they just can't compete," he said. "But I think it presents us with an opportunity to start attracting high-end, specialty retail stores."

Because it's an election year, the economists expect interest rates to remain low, which will encourage both commercial and residential investment.

Investment in projects such as the Higher Education Center and new outdoor mall in Round Rock is exactly what the economy still needs to make a full recovery, Gibbs said.

"A lot of good things are happening on all sides," he said. "The challenge is to keep the infrastructure on pace with the development, and it looks like the governments up here are doing their best to do that."