Ray Perryman might be considered the most esteemed economist in Central Texas.

The former economist-in-residence at Baylor University and business economist-in-residence at Southern Methodist University is the president of The Perryman Group, an economic and financial analysis firm headquartered in Waco.

Perryman also is a syndicated columnist and publishes The Perryman Economic Forecast, a subscription service detailing projections of state and metro area business activity.

Perryman recently talked with the Herald about the Killeen-Temple-Fort Hood Metropolitan Statistical Area.

What are the most significant trends you noticed in the Killeen-Temple-Fort Hood MSA in 2012?

Over the past year, I have been very impressed with the leadership of the area in doing things to maximize future potential, such as the Medical and Education District and other initiatives. The growth of the health sector also remains very impressive. The ongoing diversification of the retail sector in both Killeen and Temple is also a very positive sign.

Are you worried about the “fiscal cliff” and its effect on the Killeen-Temple-Fort Hood MSA?

I suspect that the fiscal cliff will be resolved. It will likely involve some concessions on both sides on taxes and spending issues and a deferral of the automatic spending cuts that were to take effect. It will have some effect on every area of the country, as some taxes will increase modestly. However, if the spending cuts in the sequestration are deferred, it will minimize some of the more direct effects that could have disproportionately impacted the Killeen-Temple-Fort Hood area, depending on how the defense cuts would have ultimately been allocated. It must be recognized, however, that the 10-tier cuts are likely to remain on the books, although they can, and probably will, be deferred further into the future. The country has to continue to negotiate toward greater fiscal restraint going forward, but I suspect it will be done in a way that minimizes sharp disruptions in local areas.

Where do you envision the Killeen-Fort Hood gross domestic production 10 years from now? Do you think it could grow to a point where there is less dependence on Fort Hood?

We are presently projecting that output in the area will be about 40 percent higher in 10 years, with incomes being over 50 percent higher, all adjusted for inflation. Fort Hood will remain a major presence, but with the winding down of the wars and the rapid expansion in health care and education, it’s likely to be a somewhat smaller relative part of the economy. Of course, no one knows what our defense posture will be in 10 years, which could have a material effect on Fort Hood.

What do you think the hottest sector for growth will be in the area over the next decade?

Although it will face its share of challenges, I would expect the health sector to be the fastest growing major sector. My reasons for this expectation include the items mentioned, as well as efforts to expand biomedical production, the demographics of an aging population, technological improvements, and efforts to expand access to care.

What do you think will be the hottest growth sector besides health care?

Outside of the military and because of the location on major highway corridors with rapid growth and some past success, there is potential for expansion in the distribution sector. I also expect health-related manufacturing to emerge, as well as an expanded retail trade area.


Contact Mason Lerner at mlerner@kdhnews.com or (254) 501-7567

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