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Sunday, November 4, 2001
Amid nationwide gloom and doom, local economy is doing well
Some indicators are down, but others show area is surprisingly resilient
By Jim Lee
After nearly a decade of uninterrupted expansion, the U.S. economy has finally slowed to a crawl. The tragic events of Sept. 11 evaporated any hope that the faltering business conditions would quickly stabilize. In September, personal income stayed flat while consumer spending declined 1.8 percent. Another official report this week revealed that the nation's gross domestic product, which measures the size of an economy, shrank 0.4 percent in the third quarter.
   These unpleasant statistics only confirm what seems to be a forgone conclusion-the onset of a recession. America's war against terrorism now becomes nothing but the backdrop for an economic battle at the home front. How does Corpus Christi stack up during this turbulent time?
   Gauging by the hard data in hand, the local economy remains resilient to negative shocks. Its gross metro product-the equivalent of gross domestic product for the area-did not retreat during the third quarter. Instead, thanks to the momentum built over the past year, it gained 0.3 percent to about $10 billion!
   Other economic indicators for September also highlight the city's ability to withstand the current shock. The most severe setback, of course, occurred at the airport when most planes were grounded for more than a week after the terrorist attacks. Compared to the same month last year, the local airport lost nearly 35 percent in passenger traffic and 60 percent in freight volume.
   Purchases put off
   With fears and uncertainty, many households postponed decisions on major purchases such as vehicles and homes. Car dealerships sold fewer vehicles, dragging the already weak business further down 7.2 percent this year. Meanwhile, only 145 homes were sold in September, compared to 307 homes a year earlier. Thanks to falling interest rates, the third quarter as a whole still registered a nearly 30 percent gain in existing home sales over the same period last year.
   Otherwise, the overall economic condition for Corpus Christi in September was a continuation of its recent trend. As a pleasant surprise, the lodging industry appeared to suffer only little. The hotel and motel occupancy rate fell only 3.6 percent compared to September last year. The milder than expected decline in occupancy might be attributable to an increase in convention delegates hosted in the city.
   The Sept. 11 shock waves have definitely reshaped the landscape of the U.S. labor market. Despite an illusively steady 4.9 percent unemployment rate, the nation cut nearly 200,000 jobs within a single month of September-the largest decline since 1991-only followed by 415,000 layoffs in October.
   Government job gains
   Yet Corpus Christi's workforce remains resilient, despite layoffs by several large firms earlier this year. The nearly 6,000 help-wanted ads in September helped add some 800 jobs to the area. Thanks in part to various civic projects under way, the government sector has, at long last, also realized job gains.
   The destiny of Corpus Christi ultimately depends on the current state of its economic fundamentals. Surprisingly enough, the local economic indicators at a glance look better for this September than for August. Amid all the glooms and dooms about the U.S. economy, this is as good as it gets.
   Looking ahead, how can Corpus Christi weather an imminent nationwide recession? One might gain some perspective from hindsight. During the last recession between July 1990 and March 1991, the area suffered an 8.5 percent decline in retail sales while the U.S. lost 1.6 percent. Within the same period, local businesses cut 233 jobs, or 1.8 percent, as compared to the national average of 0.3 percent. Such a quick historical tour suggests that Corpus Christi can be as vulnerable as it is resilient.
   At least for now, the local economic engine is still humming. A national economic fallout can drag an otherwise healthy local economy down by spreading bad news and pessimism around. And this time around, consumers hold the key to keep recession at bay.


Jim Lee is an associate professor of economics at Texas A&M University-Corpus Christi.

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