Holliman Column
As with any economic ecosystem job growth is essential. Without jobs nothing else really matters; no other sectors can self support for long without a healthy workforce. At a fundamental level is the consumer who is dependent upon employment to pay rent, mortgages and living expenses. Consumer expenditures flow through to small business owners who sell them goods and services. Small business owners also depend on consumer spending to service their payables and real estate expenses. The major players are the regional manufactures and utilities that depend on small businesses and consumers to sustain their economic models and create the jobs base necessary to complete the cycle.
Laredo’s Economy Is Insulated
In the past Laredo’s distance from other major economies and cities has been viewed as a negative barrier. The distance factor is believed to exclude Laredo from participating in many of the financial gains experienced by other regional and national markets like San Antonio, Houston, Dallas and other parts of the United States. On the other hand this negative barrier has actually performed as a protective insulator shielding the local economy from the recent downturn experienced during this deep recession. Laredo functions like a micro global economy because of its close proximity to Mexico. That relationship is linked to the outsourcing of manufacturing labor and the insatiable demand for Asia-Pacific goods. And it appears that as long as those trends remain strong the local economy will continue to benefit from it.
Local Jobs Data For Q4 2010
The Texas Work Force Commission reported the number of workers employed in the Webb County workforce increased to 95,600 in Q4 of 2010 from 94,600 in Q4 of 2009 a year earlier. This increase in employment occurred during the deepest part of the economic recession supporting the fact that Laredo’s fundamentals have remained sound. During the same year-over-year time period the Webb County unemployment rate was 8.1% in Q4 of 2010 a number lower than the 9.2% for Q4 of 2009 reported in the previous year.
The top job sectors in Laredo as reported by the Texas Workforce Commission and the Real Estate Center at Texas A&M University include the following:
- Trade, Transportation (including Trucking) and Utilities, 25,700 workers or 32% of total local jobs
- Government, 22,800 workers, 26% of total local jobs
- Education and Health Care Services, 17% of total local jobs
- Professional and Business Services, 6% of total local jobs
- Financial Activities, 4% of total local jobs
- Information and Manufacturing both combine for 1% of total local jobs
Other Employment Drivers for 2011 – Eagle Ford Shale
The Eagle Ford Shale Play is a oil and gas producing formation located in multiple counties throughout South Texas. Much of the current drilling activity has been concentrated in the La Salle County area and around the city of Cotulla, Texas. The local job market in Laredo and Webb County stand to be significantly impacted by the developments stemming from the Eagle Ford Shale play. Exactly how much? Local officials and economists can’t seem to agree on this topic as only time will tell. China is definitely a believer in the Eagle Ford Shale as their national oil company CNOOC Ltd. has agreed to invest up to $2.2 billion in a drilling partnership with Chesapeake Energy Corporation. Local hotels are already seeing benefits from the new economic expansion because oil and gas workers can’t find accommodations in the City of Encinal or Cotulla. In addition oil and gas booms create additional jobs; Chesapeake energy said that the projected drilling programs could bring up to 20,000 new jobs to this region. Large scale drilling programs create a higher demand for oilfield services. Recently there has been a significant increase in new and existing companies expanding their workforce to meet the demand. All this economic activity stemming from the Eagle Ford play will definitely trickle down to the local Laredo job market as oilfield salaries generally range from $33,000-$53,000 a year with benefits.
In conclusion jobs and economic data are a good statistical barometer that can identify real estate trends out into the future. Increased job growth supports a strong economy which inevitably stabilizes local real estate markets. The good news is all statistical indicators are pointing to the upside and the trend appears to be a favorable one for 2011. As they say in real estate, “the trend is your friend”.
