Seeing the beginning of Austin growth phase

Published 11:29 am Friday, December 3, 2010

How many times does a dollar circulate around a community before its ripples fade away or spend themselves against some other shore? Does a dollar spent in Austin cycle around time after time, helping pay for jobs and services and more jobs?

Almost certainly so.

Back in the 1980s, we believed that a dollar spent locally cycled around — or multiplied, as some put it — seven times. Today, that seems like an unrealistically large multiplier. Dollars spent here almost certainly cycle fewer times before their effect is lost because it is so much easier to bank, shop and buy services in distant markets via the internet.

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An economist might hazard a guess about the modern multiplier in a community the size of ours based on an elaborate study of data. But it’s not really necessary to go to those lengths. Simple observation suggests that the effect is almost certainly still there to some extent. A dollar spent at a large local retailer does help that business hire and pay more employees, who probably spend at least some of it on gasoline and food here.

Which is why it’s particularly good news that sales of goods and services in Austin have been on a steady increase for the past two years. Indeed, as of June total taxable sales have been better each month than during the same month a year ago for 21 straight months.

During June, the last month for which data is available, sales of taxable goods and services were 1.82 percent higher than during June 2009. During May, they were 6.21percent higher and during April 8.98 percent.

These data are based on taxable items only, because records of sales tax collections are a good way, probably the most accurate way, to track retail sales by city, county or state.

Boring discussions of methodology aside, the point: Increasing retail sales is a favorable sign for the local economy. And not just because of the dollar-multiplier effect. Increasing sales tend to beget more sales because wherever people spend their money, they’re likely also to spend more of it.

Even dollars spent at national mega-chains produce favorable results for the community because someone who decides to buy a television at Wal-Mart, for example, might also make a side-trip to the mall or a nearby restaurant. And if enough of that sort of secondary purchasing takes place, more business will want to be here to take part in it, which expands the process another notch.

Beyond economic activity, this effect is also a quality-of-life matter. It’s easier, more fun and generally better to live in a place where there is convenient access to goods and services. The more goods and services there are, the more people there will be nearby, which once again pushes the growth cycle forward a notch.

Of course, our community does not exist in a vacuum, so larger economic trends — the state’s budget woes or the world credit crises — can bump the cycle off course. And under the best of circumstances, the growth of the retail and service economy is like watching an oak tree grow: it’s so slow that it might take half a lifetime to observe any real progress.

In any case, a few months’ data is not enough to conclude that there’s a solid trend under way. It is, though, certainly a hopeful sign.


My thanks to a reader who responded to an earlier column about squirrels raiding my bird feeders. He suggested less confrontational approach: Feed the squirrels, too, so that they won’t want to climb into the feeders. I’ve spent so long hating the rodents that this was hard advice to take, but this week I began scattering a few peanuts in the shell in the side yard.

So far, so good: No squirrels in the feeders lately.

Thanks for the good advice.