Wednesday, June 25, 1997

Texas economy rosy, experts say likely to stay so for awhile

By KATIE FAIRBANK / AP Business Writer

DALLAS (AP) - Close on the heels of stories about when oil and money flowed during Texas' heady oil boom days, are tales of the bust and woe that followed during the mid-'80s oil glut.

That could be why many in the Lone Star State hesitate to define the state's current robust economy and promising future as a "boom."

"I think the last crash taught a lot of people a lesson. They're feeling real good, but we may not again see the kind of behavior we had seen in the boom," said Sheila Clancy, spokeswoman for the state comptroller's office.

Despite Texans' caution, they're feeling good about the healthy pace of growth and lack of dark clouds on the horizon.

"Consumer confidence in Texas is much higher than the rest of the nation. It's because the economy is doing well and jobs are plentiful. There also is an increase in construction in some regions of the state," Clancy said.

Part of the confidence can be attributed to a well-rounded economy this time around, unlike the oil-spurred prosperity that peaked in the early '80s.

"The economy is pretty much a broad-based boom, if we can call it a boom. It seems to be a relatively healthy economy," said John Kruse, a labor market analyst for the Texas Workforce Commission.

Economist Ray Perryman agrees, noting that employment and real gross product figures indicate a stable state economy for the long term.

"While cycles are inevitable and we do anticipate some slowdown from the frenetic pace of the early 1990s, the strange collection of forces that produced the 'bust' of the 1980s is no longer remotely present," Perryman forecasts for the spring.

Even the oil and gas industry is on the upswing these days thanks to steadying prices, increased global demand and improved technology.

Clancy said her indicators are projected for the next six months and during that time, "things are looking rosy."

While opinions differ as to whether the state will continue its growth or slow down, no one sees "any signs of a significant, serious downturn," Kruse said.

Employment figures released Tuesday show labor conditions in the state improving, especially in the service and construction industries, as statewide employment for Texas businesses increased by 261,300 jobs from December 1995 to December 1996.

Consumers also see the results of a growth cycle.

"The economy is getting better and better," said Farida Pengwani, who hopes to buy a small delicatessen. In the last three years, she's watched prices escalate by 50 percent as she searched for the right property. she's watched prices go up.

The telecommunications industry is one of the reasons behind the growth.

"Communications plays a major role, both directly and indirectly. To some extent it lubricates the economy as a whole. It's used by other sectors of the economy become more productive as communications becomes more advanced and sophisticated," Kruse said.

Austin became a major high-tech player in 1984, when large computer consortiums Sematech and Minnesota Mining & Manufacturing Co. moved in. As evidence of the growth of the high-tech industry, it is expected to contribute more to next year's state economy than oil for the first time.

Dallas, once home to big banks, now is experiencing growth as a telecommunications giant along a corridor stretching north into the suburbs.

The growth in the technology industry has driven development in Dallas and Austin.

Office space occupancy rates in Dallas are their best in 15 years, while in Austin, building reached record highs in 1995 and 1996 and only recently has apartment construction caught up with the occupancy rate.

"In recent years, builders have been busy trying to keep pace with demand for office space and apartment units," according to the Texas Labor Market Review.