Economists and futurists recently joined members of the Greater Austin Chamber to discuss the annual regional Economic Outlook.

The program provided members with a detailed look at national, regional and local economic trends. In addition to an economic review by Mark Vitner, an economist with Wells Fargo, members were treated to a panel discussion on artificial intelligence, moderated by Dan Zehr of the Austin American-Statesman. Guest speakers were Bruce Porter of UT Austin; Peter Esser of NXP Semiconductors; Rob High of IBM; and Shaku Selvakumar of CognitiveScale

There were three main takeaways from the event held on December 8:

Economy growing but wages dwindle

The Central Texas region is going strong. According to Wells Fargo economist Mark Vitner, instead of growing by 2.1 percent a year, the Austin metropolitan region will grow by 2.6 percent in 2018 and 2.5 percent in the first half of 2019.

“From a competitive standpoint, Austin is doing very well,” said Vitner. “In terms of jobs growth, we have been adding jobs every month since the middle of 2010. This is the longest uninterrupted job growth we have ever seen. But one of the things missing is wages haven’t been rising all that rapidly.”

Austin is the sixth best performing major metro based on growth in average wages and salaries per job over the past five years. According to the latest annual release by the U.S. Bureau of Economic Analysis, personal income totaled $106 billion in the five-county Austin metropolitan area in 2016. Per capita personal income was $51,566 in Austin in 2016.

“Part of that is demographics. We have baby boomers that are retiring and leaving the workforce at relatively high wages being replaced by younger millennials coming into the labor market at lower wages and less job experience,” said Vitner.

Inflation, as measured by the national price index for personal consumption expenditures, has averaged 1.2 percent annually over the last five years. Vitner believes technology plays a huge factor in keeping inflation low.

“Now you can walk into the dealership with your smartphone or find the best price for a hotel. When I go shopping, I can determine whether or not I can pay that price or order it online to be delivered to me. That’s a big change,” said Vitner. “That has put a lot of restraint on inflation. I’m not worried about the low inflation environment because it is a structural change that is a good development.”

As the economy in the Central Texas region continues to grow, we will be faced with a couple of challenges. This includes spreading economic opportunity to individuals who don’t have the skills or training in technology or life science sectors and enticing potential workers back into the workplace. One caveat to this is an early warning sign the economy is starting to slow. Per Vitner, this can be found in the manufacturing index also known as the ISM.

“If it begins to dip back down to between 50 and 55, that means the economy is set to slow. Right now we are at 60 and I don’t see that happening anytime soon,” said Vitner. “So I think that at least for the first half of 2018 we are likely to carry over the same strong growth we have seen over the last three months. After that, I would think that things will cool off a little bit.”

Opportunity Austin works to ensure regional growth; New OA 4.0 platform in the works to secure our economic future

As the Central Texas economy continues to grow, one Chamber program plays a huge role in its success.

Opportunity Austin, partners with five-counties in the region to ensure job creation and spur economic development in the Austin Texas region. Since its launch in 2004, driven by the negative impact of the tech bust on Austin, the OA effort has supported efforts to create 356,000 new jobs representing an increase in payroll of $21 billion.

“A key reason investors find the program so rewarding is that the success goes far beyond other economic development efforts,” said Kerry Hall, President of Texas Capital Bank and Vice Chair of Opportunity Austin. “Our program also focuses on reducing Austin’s poverty rate, increasing the number of students going to college and addressing affordability and mobility challenges.”

The OA program has helped 100,000 high school seniors and their families find money to afford college. Through its Financial Aid Saturdays program, high school students and parents were successfully able to complete the FAFSA which provided families a way to afford college—nearly $1 billion in financial aid.

“Opportunity Austin is a full, encompassing program. While new company announcements and local company expansions highlight much of the activity, we are working to continually build the foundation to keep our region strong,” said Hall. “We keep an eye on the future with programs developed to enhance talent and education and to address transportation, which includes roads and air service. Many of these initiatives take work over many years.”

The recent announcement of Merck choosing Austin as the home of its 4^th Global Innovation center was by no coincidence. This was a direct result of Opportunity Austin’s work in generating partnership opportunities for the Dell Medical School which it advocated for in 2004. The initiative also landed Austin’s first non-stop transatlantic flight, British Airways.

The recent announcement of Merck choosing Austin as the home of its 4^th Global Innovation center was by no coincidence. This was a direct result of Opportunity Austin’s work in generating partnership opportunities for the Dell Medical School. OA was actually the first to call for the new medical school in 2004. In addition, OA drove efforts to help Austin land its first non-stop transatlantic flight to London, via British Airways.

As the Austin region continues to grow and news of this initiative continues to spread, the next generation of OA (Opportunity 4.0) will launch in 2018. New programs of the initiative over the next five years build on the success of OA 1.0 through OA 3.0:

• Creating a business-friendly environment that supports the growth of local companies;
• Expanding direct foreign investment in the region;
• Recruiting new and diverse company headquarters that provide residents with a wide range of job options;
• Building the talent pipeline by partnering with universities, colleges, and local companies;
• Preparing students for college and individuals for career readiness to ensure they are best equipped to take jobs within the region; and
• Finding even more ways to address the region’s mobility and affordability challenges.

Opportunity 4.0 is expected to raise $30 million to continue economic growth in the Central Texas region.

Artificial Intelligence and its place in the future

From technology such as IBM’s Watson, Google’s automated car, and Microsoft’s face recognition technology, you can say that artificial technology is growing at rapid speeds. But according to UT Austin’s Professor of Computer Science, Ben Porter, this seemingly new technology to us is rather old—61 years to be exact.

“Artificial intelligence started in about 1956. It benefited by having a vague definition because it enabled a lot of opportunistic exploration of new technology,” said Porter. “AI systems are derived from computer science and tend to have four traits—sensory data, autonomy, knowledge, and automated judgment. We see this for example in systems like Amazon’s recommender systems, IBM’s Watson and also in new systems today. I think in the next ten years we will see a lot more of it.”

Artificial intelligence is profoundly transforming the daily lives of humans and the way businesses operate. The benefit of this technology is data that provides businesses with information on how they can improve their organization as well as the communities they serve.

“We are using AI as a metaphor for how we can capture certain things in a competitive system. I think we have all come to realize that AI amplifies human cognition,” said Rob High of IBM. “We can use these systems to inspire new ideas and better decisions.”

As technological advancements spur greater economic growth, the demand for artificial intelligence continues to grow. One 21^st century example is Uber and Lyft. Both companies found ways to leverage technology to create profitable business models.

“We have capabilities and also the demand,” said Peter Esser of NXP Semiconductors. “Society has shifted to where we use the smartphone in almost everything that we do. It’s a remarkable advancement in technology but also to the way we shape our own lives.”

As businesses and AI continue to merge, this task is no small accomplishment. Technology offers the perspective and experiences of customers that interact with company brands through effective programming and deep human analysis.

“The social alignment is industry data and this is starting to impact the quality of the insight that is becoming more relevant to businesses,” said Shaku Selvakumar of CognitiveScale. “It’s fascinating because there is still so much that we are constantly discovering. We are in this race to figure out how AI can actually help increase productivity and the customer experience.”

The event was held at the JW Marriott and was sponsored by Wells Fargo, NXP Semiconductors, Dell EMC, the Austin Technology Center, KVUE, Brookfield Residential, St. David’ Healthcare, Texas Mutual, UFCU, AT&T, Seton Healthcare Family, Bank of America, ABC Home and Commercial Services, Baylor Scott & White, Cook-Walden Funeral Homes, Goodwill Central Texas, Google, HEB, Intel, Southwest, Austin City Limits Live, RSM, and SWBC.

For more upcoming Austin Chamber events, click here. To view photos from the event, click here.

Image 1: Mark Curry, Community Bank Presidentof Wells Fargo, speaks to crowd about economic development.
Image 2: Mark Vitner, Managing Director and Senior Economist of Wells Fargo, provides keynote speech on economic outlook of Central Texas region.
Image 3: Kerry Hall, President of Texas Capital Bank and Vice President of Opportunity Austin, gives attendees an update on Opporuntiy Austin 4.0.
Image 4: Moderator Dan Zehr of the Austin-American Statesman and panelists (left to right) Bruce Porter of UT Austin; Peter Esser of NXP Semiconductors; Shaku Selvakumar of CognitiveScale; and Rob High of IBM, talk about the role of artifical intelligence in business.