July 27, 2010
San Antonio – In a mid-year economic update given this morning at a SABÉR Research Institute event, two local economists presented data that shows that neither San Antonio nor the nation is going into a double dip recession as indicated by some economists.
The findings were presented by Steve Nivin, Ph.D., SABÉR chief economist and director, and Keith Phillips, Ph.D., senior economist and policy advisor for the Federal Reserve Bank of Dallas-San Antonio Branch. Nivin and Phillips updated their economic projections and findings first presented back in January.
Today Phillips re-emphasized that the national recession is likely over, although government debt problems in Europe highlight that markets are still fragile.
“A negative yield curve has preceded every recession since the mid-1950s and it is currently quite positive, indicating a very low chance of recession over the next four quarters,” said Phillips. “We may see some slower growth throughout the rest of the year and into 2011, with the average forecast in the Blue Chip Survey predicting between 3 and 3.5 percent growth for the nation.”
Phillips calculated the probability of recession, based on his analysis of the yield spread (the difference between the 10 year and one year interest rates on government securities). In his presentation, he showed that they indicate a very low probability of a double-dip recession over the next fours quarters.
Back in January, Phillips projected about 1 percent employment growth for Texas, but now says that seems to be too low. He is now projecting between 2.5 and 3.0 percent for 2010, and 1.5 to 2.5 percent for 2011.
Nivin, who is also an assistant professor of economics at St. Mary’s University, projected in January an employment growth for San Antonio for the year between 2 and 2.5 percent. Nivin said today that he thinks that still may be attainable. San Antonio’s employment growth has been about 1.1 percent, on an annualized basis, and Texas was 2.9 percent.
“While San Antonio’s employment growth has lagged behind the State and other major metropolitan areas (Dallas-Ft. Worth, Houston, Austin),” said Nivin, “it is likely due to the fact that our economy did not experience as large of a decline during the recession resulting in a smaller rate of growth during the recovery. However, I believe my projections in January are still attainable, and I do not foresee the San Antonio economy going into a second recession.”