Published: San Antonio Express-News
By: David Hendricks
Date: January 11, 2011

The San Antonio area will see a surge of 27,300 jobs in 2011, for an above-average net gain of 3.2 percent, a senior economist predicted Tuesday.

Keith Phillips, the Federal Reserve senior economist based in San Antonio, told more than 75 invited business executives at the Fed's downtown branch office that the job growth will accelerate from last year, which likely will have ended up with a 2.1 percent gain when all the numbers come in. A 2.1 percent gain would equal a net job growth of 17,600.San Antonio's average yearly job growth over the past two decades has been 2.2 percent, Phillips said, so a 3.2 percent gain would be a full percentage point higher than a typical year.

San Antonio's job growth also is expected to outpace that of Texas overall.

Phillips predicted statewide job growth will be 2.7 percent, which would be up from the expected 2 percent for 2010. The job increase in Texas likely will drop the state unemployment rate to 7 percent from the current 8 percent.

Just like the city's diverse economy, San Antonio's job gains will materialize from a variety of industries. Military, call centers, finance/insurance, Toyota and drilling activity in the Eagle Ford shale area in South Texas have produced strong job gains in San Antonio in recent months, Phillips said.

Other growth industries in 2010 were health care (with 4.5 percent job growth) and manufacturing (3.9 percent). Government, trade and finance grew moderately, about 2 percent, Phillips said.

The national economy picture is not quite as good. Phillips cited a survey of estimates that indicate the U.S. economy will grow between 3 percent and 3.5 percent in 2011, but job growth will remain lukewarm. The job growth trend is not enough to lower the U.S. unemployment rate significantly, Phillips said.

But the U.S. leading indicators index is consistent in signaling a continued recovery from the 2007-09 recession, Phillips said. The chance for a double-dip recession in 2011 is less than 5 percent, he added.

Residential and commercial real estate remain weak points for the national and state economy for 2011.

“Residential and commercial real estate will not stimulate the Texas economy,” Phillips said.

Manufacturing is ramping up in Texas largely due to exports, especially electronics and petrochemicals, Phillips said.

Asked about risks to his forecast, Phillips said there is a greater chance more jobs will appear in San Antonio and Texas than his forecast calls for, not less.

“The markets are self-correcting,” Phillips said. “Opportunities arise, and people will take risks. The mechanisms of the self-corrections are hard to see, but there is a lot of liquidity out there.”

During the luncheon, University of Texas at San Antonio President Ricardo Romo expressed concern that the Texas state budget shortfall of up to $27 billion going into the next biennium would dramatically cut state spending for higher education.

Romo said other state agencies perform services for the same number of people as a decade ago, but UTSA's enrollment has grown significantly. However, state-supported universities may be cut by the same percentages as other agencies.

“We are not equal,” Romo said.

Phillips agreed, adding that the state's budget woes will be a drag on the state economy this year.