From Steve Nivin at the SABER Institute:
“Please find attached the newest edition of the Economic Trends Monthly covering data through September. San Antonio continues to show solid growth, but while the growth rates are not quite yet above long-term trends, they are showing signs of improving. For instance, the business cycle index (a measure of current economic conditions) continues to indicate growth in the San Antonio region, the unemployment rate fell to 6.5% in August, and employment continued to grow at a clip of 1.97% compared to August of last year. The growth in employment is broad-based with only the information and government sectors showing decline in August, and an additional sign of improvement in the labor market came with the professional and business services sectors showing growth in August after many months of decline. The housing market is also continuing to show signs of improvement in San Antonio. Home sales continue to grow about 10% from the same period last year, while prices continue to increase and months in inventory persist in their downward trend.
The biggest risks to the San Antonio economy remain external – mainly political and policy uncertainty. The political uncertainty is derived from the Presidential election and the uncertainty about its outcome and potential changes in policies. The issues in the EU also provide a large dose of international political uncertainty. The policy uncertainty stems from the fact that health care reform and financial reform are not nearly fully implemented. Piled onto this is the uncertainty that the policies might be repealed after the election, and if that is the case, what comes next? Additionally, we have the added uncertainty of approaching the “fiscal cliff.” I am hopeful that our politicians will not push us over the cliff and come to a resolution by the deadline. But, unfortunately, the damage will have been done by then because the uncertainty they have injected will negatively impact economic growth in the very near term. In other words, all of this means that businesses don’t know the rules of the game, and thus, they are hesitant to fully engage. If all of these factors were not in play, I believe we would be seeing even more solid growth in San Antonio and elsewhere. I am hopeful that once the dust settles from the election, much of this uncertainty will be removed, and we will start to see growth pick-up its pace next year.”