Economist Dr. Ray Perryman believes the Tyler area economy will continue to grow closely with Texas’ rate this year as the country recovers, albeit sluggishly, from the recession.
“Texas is leading the world in economic growth right now,” he said during a news conference before the 30th annual Economic Outlook Conference Thursday.
Perryman expects to see about a 4.5 percent increase in gross production and about a 2 percent increase in employment for Tyler within the next five years. His projections of growth for the area compare closely to the state average, he said, although the area is doing better than a lot of areas in Texas.
Perryman, Lindale native and president and chief executive officer of Waco-based The Perryman Group, gave his annual economic forecast for the Tyler area, as well as the state and nation.
The event, which drew a crowd of about 620 people, is put on each year by the Tyler Area Chamber of Commerce and the Tyler Economic Development Council.
During a news conference before the luncheon, Perryman said the health care industry will continue to have a major impact to the local economy.
“Through thick and thin, in good economies and bad, it keeps growing and growing,” he said.
He said the Affordable Care Act had a lot of good intentions and will bring more access to health care and will have a positive affect once several things with it are fixed. “The most important thing about it is give us the rules … now, people just don’t know,” he said of the changes being made to health care.
Perryman expects sales tax and employment figures for the area to continue to be very close to the state average.
He said alcohol sales in Tyler have been “remarkably on target” from what they projected they would be before they came into effect. He said they are generating about $36,000 to $37,000 per month in sales tax revenue for Tyler, which is “very positive” for the economy.
Commercial and residential real estate has picked up since the recession, he said. There are few cities of Tyler’s size doing the amount of construction seen here now.
Perryman said another sector growing in the Tyler area is energy. “We will continue to see expansion as we will all over Texas,” he said.
Although East Texas isn’t seeing a big surge in the oil and gas industry as in West and South Texas, it is doing well, he said, adding that East Texas has energy infrastructure that supports the industry across the state and nation.
The state is doing well and is one of the best states in the country for job growth, creating about 300,000 jobs per year, Perryman told the luncheon crowd.
“I think we’re doing a lot of things right in Texas right now,” he said.
The state didn’t have the terrible housing crisis like most of the country, he said. “It has a healthy banking community, good cost structure and good infrastructure in key places.”
He said the technology industry also is doing well here, but what is driving the state is the oil and gas sector.
He said 1973 was a peak year for oil production in Texas but declined every year until 2008. Since then, the state has made up 30 years of that decline, he noted.
In 2010, Texas was producing 1 million barrels per day and now produces about 3 million barrels per day, he said.
Shale formations being discovered in Texas and elsewhere contain mostly natural gas. He said out of the three largest shale plays in the country, Texas has two of them in South and West Texas.
Large companies that four years ago were looking to import natural gas are now looking to export it, he said.
Perryman believes the real estate and oil bust in the 1980s was very different than the recent one experienced. “I think it’s in a much better place today,” he said, adding that it has a lot to do with today’s more diverse economy.
He said Texas is adding about 1,000 people to its population every day so infrastructure such as roadways needs to be improved. Education also needs to be bettered “if we want to compete with the national economy of the future,” he said.
He said Texas has consistently seen big businesses open locations here.
Perryman said there was a lot of mess in Washington, D.C., this past year with the fiscal cliff, Affordable Care Act, government shutdown and debt ceiling woes. He told the crowd that the nation would not default on its debt and will always increase the debt ceiling because it doesn’t have a choice to avoid an economic collapse. But suspending the debt ceiling leaves everyone wondering what’s going to happen.
Perryman said the good thing that came out of the shutdown was that “people sent a message to Washington — we’re fed up.” He said it was the first time Republicans and Democrats worked together to come up with something.
The country is growing at 2 percent to 2.5 percent a year, which is bringing up the economy.
“Things are getting better, but they’re not getting better enough,” Perryman said. “It’s a very slow, sluggish recovery.”
He said the country does not have back the jobs back it lost during recession, and corporate America is sitting on money, which doesn’t help the economy.