Forecast05_topics

All of Austin wants to know "What's Ahead for Austin in 2005?"

Here is a sneak preview of what is to come at the 2005-2006 Economic & Technology Forecast event. Be sure to attend The Forecast for more information on each of these topics and much more.

Forecast Preview Articles:

"Dance with the One That Brought You"

Austin's Retail Market Shows Steady Improvement

Venture Capital Rebounds in 2004

Dance with the One That Brought You
Austin has weathered the past two years well, due in large part to stronger than expected growth in government jobs, retail, and services.

While much of Austin’s recent story has been centered on the technology bust and the layoffs that still follow, Austin’s non-technology sector has performed well throughout the recession. In many ways, the non-tech sector is the unsung hero of Austin’s economic health today. Traditional sectors such as state government, education, retail, residential construction, and tourism are the mainstays of Central Texas. These sectors are now growing well and offer job opportunities to Austin’s newcomers and laid-off technology workers.

Let’s take a closer look at the traditional side of Austin’s economy. The non-technology sector of Austin accounts for 85% of local jobs and has grown steadily since mid-2002. Throughout the recession, Austin’s non-tech economy dipped slightly negative for only six months. First and second quarters of 2002 saw employment levels identical to those of the same quarters in 2001. By comparison, tech employment dropped 18% and 15% for the same quarters, respectively. Austin’s technology losses have been the primary contributor to the negative job growth rates reported by the Texas Workforce Commission. As the technology economy picks up, traditional sectors will be further supported as many of them provide services to tech companies or households.

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Attend the 2005 Economic & Technology Forecast to learn more about which sectors of Austin will be growing. Click here to register.

Austin's Retail Market Shows Steady Improvement

Retail sales in Austin rebounded from their steep fall in 2002 to grow 3% in 2003, and 2004 will see continued improvement. City of Austin sales tax rebates have been growing for four consecutive quarters now, after two years of declines.

Nationally, high consumer confidence and low interest rates have maintained steady purchasing throughout the recession. Sales could have fallen much farther. The chart to the right illustrates just how much spending growth has outpaced income growth. Personal income experienced a sharp drop in 2001 and 2002, but has been improving since then. Despite this fall, consumer spending held steady. Personal incomes are now growing at the same rate as consumer spending, suggesting that consumer spending will see even higher growth this holiday season and into next year.

Nationally, retail sales are now growing at 6% annually, while Austin’s growth has yet to reach the national average.

Venture Capital Rebounds in 2004

Austin's venture funding environment continues to improve. Totaling $411 million at the close of the third quarter, funding in Central Texas was on track to exceed 2003's total of $466 million.

Austin is increasing its share of the nation's venture funding as well. The $135 million placed with Austin companies in the third quarter of 2004 amounted to 3.1 percent of the national total, up from 0.4 percent a decade ago, and 2.1 percent at the peak
of the technology boom in 2000.

Semiconductor designer Alereon Inc. received the region’s largest single placement of venture capital in 2004 when it garnered $31.5 million from Austin Ventures. Other major funding recipients in 2004 included LifeSize Communications, a video communications company, at $20 million and network security firm Mirage Networks at $13 million. Both of those placements came from California venture groups. RealVue Simulation Technologies and Austin Logistics each picked up $12.5 million in venture capital, and WholeSecurity garnered $10 million.

An important driver of the venture capital market is the market for initial public offerings. Nationally, the venture backed IPO market has improved significantly this year and many Austin companies took advantage. 2004 brought Austin's largest single public offering to date and helped break a record for the year. Freescale Semiconductor, while not a venture backed IPO, raised $1.6 billion after its break from Motorola in2004, more than three times the $488 million Austin's high tech start-ups managed to raise in all of 2000. Though eclipsed by Freescale's offering, several other Austin companies contributed to a banner year for IPO's in 2004. American Campus Communities raised $212 million with its initial public offering, Staktek Holdings brought in $150 million, and Motive raised $50 million.

As the national environment for IPO’s and venture capital improves, Austin’s startup community will once again become a major economic driver.

Click here to learn more about the 2005-2006 Economic & Technology Forecast.