Economy

Teresa Vieira for KUT News

Midsize companies — firms with annual revenues of $10 million to $1 billion dollars — are now adding jobs at almost double the national average.

Middle market companies account for just 0.5% of all Texas businesses. But they employ 30% of the state’s workforce. Anil Makhija teaches finance at Ohio State University. He says midsized businesses are more reliable job creators than small ones.

“If you think about small firms, they do deserve our attention, because they are frequently the centers of innovation. But they have a very high failure rate.”

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The unemployment rate in Texas saw its biggest one-month drop in nearly two decades in September.

Statewide, the jobless rate fell from 7.1 percent in August to 6.8 percent in September. That was the result of an additional 21,000 jobs.

Here in Austin, the unemployment rate fell from 5.9 percent to 5.3 percent. That rate doesn’t account for seasonal changes in employment. Still, Texas Workforce Commission spokesperson Lisa Givens says the Austin area added 3,000 jobs last month, largely in fields including education, health services and government jobs.

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State lawmakers met Wednesday to discuss the Texas drought and how extremely low Central Texas lake levels are hurting the economy. 

The Texas House Committee on Culture, Recreation, & Tourism heard testimony from Travis County Commissioner Karen Huber and the Central Texas Water Coalition. Both Commissioner Huber and the Coalition are seeking assistance from the state for the populations living and working around the lakes. They told lawmakers that funding and assistance is needed to support the impacted communities.

Huber recounted stories she's heard from several Lake Travis business owners:

"One gas station owner says he has shut 3 of his 4 gas stations. Another business owner who owns several business on the lake says he is raiding his kids' college funds for two years. My partners and I have cashed in every IRA we have tucked away. And we are running out of options."

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Computer chipmaker AMD announced this afternoon that it’s laying off 15 percent of its workforce. 

AMD is based in Silicon Valley, but employs about 25,000 people at its southwest Austin campus. The company says poor earnings and falling sales have forced cost-cutting measures.  

Analysts say AMD has suffered from an overall slowdown in computer sales as consumers have switched to tablets and smartphones—the same trend that has hurt Austin-based Dell.  Hans Mosesmann is an investment analyst specializing in semiconductors. He says that while AMD is slimming down today to be smaller and more flexible, the company may soon be hiring again.

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The UT College of Liberal Arts is co-hosting an open house today that may place thousands of Saudi Arabian students in Texas community colleges.

The open house is organized by The Global Initiative for Education and Leadership and hosted by the Saudi Arabia Cultural Missions (SACM), The US-Alhabra Chamber of Commerce and the College of Liberal Arts.

At the event SACM officials will present their intention to place 8,000 Saudi Arabian students in two-year community colleges. The students are fully funded and sponsored by the Saudi Arabian government, which will includes their tuition, books, medical and housing needs as well as $2,000 to $4,000 a month stipends. 

UT says its main goal is to foster relationships and knowledge between our countries. "Education is one of the ways in which we can begin to build collective futures across these boundaries," says Richard Flores, senior associate dean for the College of Liberal Arts. "Where students begin to know each other, recognize the differences but begin to see the similarities, and begin to build those relationships."

Saying that the global economic recovery "has suffered new setbacks, and uncertainty weighs heavily on the outlook," the International Monetary Fund today warned that the probability of "recession in advanced economies and a serious slowdown in emerging market and developing economies" next year have gone up.

The fund said its research indicates the risk of those things occurring in 2013 "has risen to about 17 percent, up from about 4 percent in April 2012."

The news that the nation's jobless rate fell to 7.8 percent in September from 8.1 percent in August immediately led some of President Obama's critics to charge the the books had been cooked to help his reelection campaign.

With the first presidential debate now behind us, what's the next big item on the campaign calendar?

It's Friday's 8:30 a.m. ET release from the Bureau of Labor Statistics about the September unemployment rate and how many jobs were added to payrolls last month.

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The Second Annual SXSW Eco Conference and Festival kicks off today and is aptly named Evolving the Environmental Conversation.

The three day conference will bring in experts from all over the globe who are working to find sustainable environmental solutions. Attendees will get top-level presentations and discussions with professionals in the public, private and academic sectors. SXSW Eco hopes that the participants will gain access to information that will allow them to both collaborate and advance solutions for the challenges facing the environment, economy and society. 

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The Austin area experienced the greatest jobs gain in Texas last month, as unemployment dropped half a percentage point.  

In August, the Austin area added 5,900 jobs, according to the Workforce Solutions Capital Area Workforce Board.  This brings the Austin unemployment rate down from 6.4 percent in July to 5.9 percent in August. This is third time this year that the unemployment rate has dropped below six percent. Prior to April 2012, Austin had not seen an unemployment rate below six percent since 2009.

Tiffany Daniels, of Workforce Solutions Capital Area explains where Austin saw its biggest gains:

In professional and business services, we saw gains of 2,300 hires in August.  That is one of our strongest segments [in Austin], and again, expect to see continued growth in those areas. Local government, retail trade and financial activities also saw significant increases of 1300 and 900, respectively.

HID Global

Traffic is now clearing up around Stassney Lane and Manchaca Road after a gas leak at the intersection this morning. Schools in the area started on time. Here's a roundup of other news this morning:

More HID Global Incentives?

Travis County Commissioners will meet in executive session today to talk about whether the county will offer economic incentives to a company that’s considering relocating to the area.

The State of Texas is already offering HID Global $1.9 million from the Texas Enterprise Fund. And the City of Austin is considering offering the company close to a million dollars in rebates on taxes for real estate and equipment purchases. The city plans to hold a public hearing on the issue Sept. 27.

In return, HID Global would build a manufacturing and distribution center in Northeast Austin, and create 276 jobs over 10 years. HID Global makes products like ID cards and key-card readers.

Problems in Texas County Prisons

Today Texas lawmakers will take a look at problems facing county jails.

Update at 12:31 p.m. ET. Federal Reserve Announces QE3:

The Federal Reserve announced it would spend $40 billion a month on bond purchases in an effort to stimulate the economy and drive the the unemployment rate down.

The Wall Street Journal says that unlike the first two rounds of Quantitative Easing, this time the Fed will focus solely on buying mortgage-backed securities.

The iPhone 5 will give a nice boost to U.S. economic growth in the last three months of this year, according to a new note from JPMorgan.

General Motors

An announcement on the General Motors website this morning says the auto maker is coming to Austin – creating an "Information Technology Innovation Center" that may ultimately employ up to 500 people. 

The company writes on its website:

Austin was chosen for an Innovation Center because the city already has people with the skills GM is seeking -  46,000, according to the May 2011 Bureau of Labor Statistics Occupational Employment Report.

“We anticipate hiring as many as 500 new GM employees in Austin,”[GM Chief Information Officer Randy Mott] said. “We look to the Innovation Centers to design and deliver IT that drives down the cost of ongoing operations while continuously increasing the level and speed at which innovative products and services are available to GM customers."

hidglobal.com

City officials are mulling another economic incentives agreement with a company eyeing Austin for expansion – this time, California-based HID Global.

The self-described provider of “secure identity” products produces items like key-card readers, RFID tags, ID cards and more. In city documents, HID Global writes that it wants to build a manufacturing and distribution center in Austin. 

The company is offering to create at least 276 full-time jobs over 10 years – 47 before the end of 2014, and 276 by the end of 2015. Positions range from semiconductor and electronic component assembly, printing and film developing, to warehouse and shipping jobs. The average proposed wage is approximately $51,000 a year, but the expected average wage of the lowest paid 10 percent of workers is estimated at $21,000. You can read the proposed economic development agreement.

Erik Reyna for KUT News

Texas has one of the strongest economies in the nation. But in recent months the Lone Star State seems to have been outshined by the Golden State. The U.S. Labor Department reports that California has added 365,100 new jobs to its economy while Texas added 222,500.

This horse race captured the attention of The Atlantic. In a post to its website called “Why California Is Suddenly Adding Jobs Faster Than Texas,” author Jordan Weissman posits several reasons for the change:. One is growing government jobs in California versus declining government work in Texas. Another is the theory that California’s economy is primarily based on housing – which is making a slow but somewhat steady recovery.

Laura Rice, KUT News

Austin economist Jon Hockenyos says bringing a medical school and teaching hospital to Austin could add about 15,000 permanent jobs to the community.

Hockenyos says nearly 7,000 of those jobs would be directly connected with the medical facility and research. The other 8,000 or so would be indirectly created.

“The impact of this facility and the operation of this entire complex is going to create ripple effects through the whole community and so we’ll raise the overall level of economic activity here and that will in turn create opportunities in restaurants and dry cleaners and for people supplying things to the medical complex – all those different, related, ancillary activities will then, in turn, have to hire workers,” Hockenyos says.

After months of sitting on their wallets, Americans went shopping in July. The uptick reported Tuesday is boosting economists' hopes for a reasonably strong back-to-school season. And retailers are looking for clues about how the holiday shopping season will turn out later in the year.

"This is a good report," Chris Christopher, an economist with IHS Global Insight, a forecasting firm, wrote in an assessment of the latest report. "It indicates that consumers came back after hunkering down" during the year's first half when sales were "dismal."

Update at 4:33 p.m. ET. Right At Expectations:

Facebook reported slightly stronger than expected profits. For the second quarter, it reported a net loss of $157 million or 11 cents a share. But when it adjusted its earnings to remove stock compensation charges related to its IPO, Reuters reports, Facebook actually made 12 cents a share.

Former Citigroup CEO Says Big Banks Should Be Split Up

Jul 25, 2012

Sandy I. Weill, the former Citigroup CEO who helped usher in the era of super banks, said during an interview with CNBC today that big banks should be split up.

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