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Austin is #2 U.S. Metro Least Touched by Recession

October 23rd, 2009 11:59 PM by Heather Brown

According to Yahoo News:

Austin is the #2 U.S. City least touched by the recession, behind #1 San Antonio.

America's strongest economies have one thing in common - home prices that never got too hot or too cold.

Home prices in metros such as San Antonio, Oklahoma city, Pittsburgh, Rochester, Little Rock, Ark and Baton Rouge, La., remained steady through boom and bust.  Although no metropolitan area entirely avoided the economic downturn, the most resilient metros were protected by a potent mix or recession-resistant jobs.

The upstate New York areas of Syracuse, Rochester, Albany, and Buffalo suffered from declining jobs in manufacturing, but got significant boosts from sizable health-care, education, and government sectors.  construction is booming in Baton Rouge, Louisiana's capital, as firms take advantage of financing for post-Katrina hurricane recovery work and service-related companies expand to meet the needs of a growing population.  Omaha and the state of Iowa have relatively strong insurance sectors.

Texas, the last state to enter recession, has been bolstered by its oil and gas industries -- which have also helped Oklahoma, North Dakota, and Louisiana.  Texas also has many other things going for it, including affordable home prices and relatively low wages, which attract corporations.

BusinessWeek.com used data and analysis from the Brookings Institution's new MetroMonitor to come up with the nation's 40 strongest economies.  The MetroMonitor, which measures the nation's health on a quarterly basis, ranks the top 100 metros based on job growth, unemployment, gross metropolitan product, and home prices.

Although the metros in the ranking are strong by relative standards, their unemployment rates in many cases are now peaking because they entered the recession late.  Texas, which had 5 metros in the top 10 including no.1 San A Antonio and no.2 Austin - is a good example.

The unemployment rate in Texas hit 8.2% in September, rising above 8% for the first time in 22 years.  But that's a very low unemployment rate, compared to the national rate of 9.8% or to Nevada's 13.3% rate.

Texas is unlikely to face a prolonged downturn, said Terry Clower,an economist at the University of North Texas.  The state's affordable cost of living make it attractive to new residents and corporations, the largest of which tend to be based near Houston and Dallas.

According to Clower, "Texas is perceived as a low cost place to do business, because housing is affordable, the wage rates reflect that."

It has also been said that late arrivals to the recession will generally face mild downturns.

Federal Reserve Chairman Ben Bernanke might think the country is out of the recession, but unemployment is rising from Connecticut to California and banks are taking possession of a growing unemployment is rising from Connecticut to California and banks are taking possession of a growing share of American homes.  But some metros across the nation have managed to stay out of the recession's path and could now be poised for recovery.  Using data and analysis from the Brookings Institution's new MetroMonitor study, BusinessWeek.com ranked the nation's top 40 economies based on job growth, employment, economic growth, and home prices.  And Texas seems to be the clear winner with San Antonio at the to of the list and five metros in the top 10. 

Austin, known as a high-tech center and home to the University of Texas.  Employment in the Austin metro peaked in the fourth quarter of last year.  Gross metropolitan product peaked in the second quarter.  Home prices grew 2.5% in the second quarter compared with the same period a year earlier.  The unemployment rate in June was 7.1%, up 2.6 points from a year earlier. 

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Posted by Heather Brown on October 23rd, 2009 11:59 PM

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