Galveston Economic Report
David Stanowski Publisher
Still Number One!
by David Stanowski
29 December 2008
An earlier article entitled "Voting With Their Feet" argued that the dominant reason most people move is for better economic opportunities. The authors of a 1996-2006 study on this subject found that, during that period, the State of Texas had the most attractive economic conditions in the nation! Just-released data show that, due to the continuing relative strength of the Texas economy, the State is the current leader in population growth!
Unfortunately, Galveston is one city in the State that is losing residents due to its anemic economy.
Movers and Stayers:
A new study by the Pew Research Center, "American Mobility: Who Moves? Who Stays Put? Where’s Home?", shows that the State of Texas has two very powerful forces growing its population. First, it has the highest percentage of residents born in the state (75.8%), who still live in the state. Second, Texas is attracting more immigrants from other states than any other state. The reason for these trends is the strength of the State's economy and the fact that it is a very desirable place to live.
The study went on to show that overall U.S. migration has declined to its lowest level since the data series began in 1948. This seems to be due to an aging population, more two-career couples, and the housing-bubble bust that has made it much more difficult to sell houses and move. The mobility of its residents has always been one of the strengths of the American economy, and with mobility dropping, it will be more difficult to recover from the current economic troubles.
The most current data, covering July 2007 to July 2008, found Texas gained more residents (484,000) than any other state! This represents a 2% increase, and it was only slightly surpassed, on a percentage basis, by Utah and Arizona.
Texas Tops Population Growth
End to Sunbelt's Population Boom
Recession Slows Migration
The population trend in Galveston clearly shows a city in decline since 1960! This is even more surprising since it is not located in a region that is struggling like the Midwest Rustbelt. How Galveston found a way to exclude itself from the robust Texas economy, for almost half a century, should be a subject worthy of a Noble Prize in economics. It would certainly show other cities what not to do!
If Galveston had just maintained the growth rate that it enjoyed into the 1960 population peak, its 2007 population would have been about 120,000 instead of 56,940! Such a prosperous city may have even seen the need to surround the entire island with a seawall or dike to protect its expansion.
Some would argue that the loss of 10,235 residents (15.24%) between 1960 and 2007 was due to Galveston's poor school system, high crime rate, lack of affordable housing, or other such factors; but it is more likely that these "social factors" deteriorated because of a sinking local economy. Without a healthy economy, middle class growth ends, and existing members of this group begin to leave for better opportunities elsewhere which creates the conditions for the schools to decline, crime to rise, and housing to become less affordable.
The next chart shows the normalized population data for the City of Galveston versus the State of Texas. They both start with a value of one, in 1850, which allows the two population growth rates to be compared directly.
Note that the growth rates were fairly similar until the first census after the 1900 Storm. From 1910 to Galveston's population peak in 1960, the divergence continued to grow. However, after 1960, the State population really accelerates while Galveston's actually declines!
Comparing the population growth of the City of Galveston versus Galveston County paints a somewhat different picture. In this case, population growth is very similar until 1940, and only begins to diverge in 1950. Also note that Galveston County's population has grown at about one half the rate of the State as a whole, so it should be a fairer benchmark for the City. However, the differences are still amazingly large!
How does Galveston's population growth compare to one of the great economic engines in the world; its big brother to the north; Houston? They actually track pretty closely until 1900, and then Houston explodes to the upside, showing eight times faster growth than the State as a whole!
1. Everyone is going to be effected by the economic "Hard Times" we have recently entered, as discussed in "Why is Bad News so Good?", however, some states and cities will fare much better than others, and the pain will also be spread unevenly between individuals. All of the current data tends to say that the State of Texas, and especially the City of Houston, will be good places to hunker down and ride out this Financial Hurricane.
2. The Galveston economy and population have been in decline since 1960. Regardless of the reasons, population growth serves as a very good proxy for how desirable people find a place to live. Currently, the Galveston population reportedly has dropped from about 57,000 to 40,000 or less due to Hurricane Ike. Many of the missing residents have left temporarily until their houses can be repaired. If the population does not begin to rise substantially over the coming months, this will be a very bad sign for recovery efforts, and the future of the City.
By the time the 2010 census results are available, sufficient time should have passed to allow all of those who want to rebuild to do so. If that count doesn't approach 57,000, it will signal that the population decline that began in 1960 is accelerating, and that the losses will be permanent. The City must dedicate itself to rebuilding a local economy based on something more substantial (primarily The Port) than tourism if it is to have any hope of maintaining a population greater than it enjoyed in 1920!
For more information on the Galveston Economy: Click Here
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