Austin Chamber

September 8, 2015 – Business Cycle Indexes

Posted By Beverly Kerr | Sep 08, 2015
Central Texas Economy in Perspective Print Article Austin Chamber
  • Austin’s overall economic activity is expanding at a rapid pace, gaining 9.9% in the last 12 months.

  • Gains among Texas’ other major metros over the same period range from 3.5% in Fort Worth and Houston to 6.6% in Dallas.

  • Austin’s Business Cycle Index has risen every month since October 2009.

  • The Index summarizes movements in employment, the unemployment rate, inflation-adjusted wages, and inflation-adjusted retail sales in each Texas metro.

The latest update to the Federal Reserve Bank of Dallas’ Business Cycle Indexesreveals significantly stronger economic growth for Austin than Texas’ other major metros. Austin is markedly outpacing Dallas, even though Dallas has bested Austin in year-over-year job growth each of the last 10 months. Austin’s overall economic activity is expanding at a rapid pace, gaining 9.9% in the last 12 months. Gains among Texas’ other major metros over the same period range from 3.5% in Fort Worth and Houston to 6.6% in Dallas.

The Business Cycle Index summarizes movements in locally measured nonagricultural employment, the unemployment rate, inflation-adjusted wages, and inflation-adjusted retail sales. The indexes are weighted so that movements in the index represent underlying co-movements in the indicators and thus the underlying state of the economy and illustrate each metro’s patterns of recessions and expansions.

Austin’s index has risen every month since October of 2009 and has averaged an 0.80% increse monthly in 2015, compared to 0.75% monthly growth seen in 2013 and 2014. According to the discussion of the Business Cycle Index in Thursday's Austin Economic Indicators report from the Dallas Fed, "A small exposure to the oil and gas sector and a bright outlook for sectors such as high-tech, health care and tourism suggest continued strength in the Austin economy in the second half of the year."

The graph above and the one below show views of the indexes for Texas’ largest metros over longer and shorter range spans. The first indicates the path over the last three-plus decades and the second shows the indexes rebased from 1980 to 2004 to isolate the relative courses of the metros over the last decade.

The five major metros have been expanding since between October 2009 and January 2010. Since the end of 2009, Austin’s index has grown 58%, while Dallas, Houston, San Antonio and Fort Worth have grown 33%, 31%, 30% and 27% respectively.

The pre-recession Business Cycle Index peaks for the metros occurred between May and August of 2008. Austin is 53% ahead of mid-2008, while Dallas has advanced 29%. San Antonio, Fort Worth and Houston are up 26%, 21%, and 20% respectively.

The following graph shows the monthly percent change in Austin’s index compared to the state Business Cycle Index.

In addition to the Business Cycle Index, which is a coincident index, the Dallas Fed also produces a Texas Leading Index to forecast future economic activity for the state.

This Index dipped slightly in June (0.41%) but is up by 0.94% over the last three months. The following graph shows the changes in the eight different components of the Leading Index over that period.

The Leading Index is used to generate a state employment forecast and the most recent forecast by the Dallas Fed is for 1.5% job growth statewide in 2015. This is up from under 1.0% growth forecast in mid-June.

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The Metro Business Cycle Index, as well as the Texas Business Cycle and Leading Indexes are included in the Chamber’s monthly Economic Indicators report and associated Excel files.

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Beverly Kerr

Vice President of Research, Beverly Kerr, joined the Chamber’s Economic Development Department in 2004, following 10 years in a similar role with the Kansas City Area Development Council. Beverly earned an M.A. in economics at the University of Missouri-Kansas City.