DRC Year Ahead Summit: Reflecting on the HQ2 Decision, Forecasting the 2019 Economy

When they gazed into their crystal balls at the Dallas Regional Chamber’s Year Ahead Summit recently, observers of the U.S. economy saw mostly blue skies, but a few gathering clouds.

Fluor Corporation Chairman/CEO David Seaton, Polsinelli public policy expert Julius Hobsonand economists Ray Perryman and Cullum Clark served as panelists for the DRC annual glance into the fortunes of the nation and the region. They also offered their opinions on Amazon’s decision to choose its HQ2 project in the Eastern Time Zone. Roughly 275 attended the event at the DRC’s Year Ahead Summit on Thursday, Nov. 15, at the Fairmont Dallas.

Seaton said that the competition to land HQ2 brought welcomed attention to the Dallas Region, and that Amazon’s decision not to choose the region might benefit it.

“The diversity of the business community Dallas Region is a special thing – it’s as special as having DFW (Airport),” he said. “We’re not beholden to any one industry, in the cycles that they’re in. I’ve lived in Houston, and when the oil prices go down, it’s not fun.”

Outlook on the economy and infrastructure

The U.S. and Texas economy have changed completely under the advent of fracking.

“I think the U.S. economy has completely changed on the back of shale gas, and I don’t see it slowing any time soon,” he said. Seaton said that the economy is the strongest it’s been in his lifetime.

Yet Seaton also said that he foresees another recession hitting the U.S.; it’s just a question of when it will happen, and what will set it off.

“I think the (federal) debt increase, increases the chance for recession,” he said. “I think it goes through cycles,” he said, adding that the debt climbed higher than President Donald Trump anticipated because the anticipated higher tax revenues generated by tax cuts. He added that the national debt is the single largest risk the U.S. has in its future.

“Either someone’s going to fix it, or corral it, or we’re heading toward a worse-than-recession economy,” he said. “I don’t know if it’s going to happen in the next decade, but the math just suggests we just can’t continue this.”

Seaton predicted that Washington might be able to pass a much-needed infrastructure bill, and that it will be funded through a tax increase – perhaps a gas tax. The current political system, he said, generally doesn’t lend itself to the long-term planning necessary.

“We’ve got to think about infrastructure through the lens of 50 years — not filling potholes. But most politicians are paid to fill potholes. (That’s an) overstatement, but the short term need of a community is really what those politicians are” filling, he said.

Seaton said he views the future of major transportation projects – such as rail transit – as public/private ventures.

“We’ve done the only public/private light rail programs in the United States so far,” he said.  “It’s got to come from somewhere. You hear about all that money sitting in coffers … that people want to put to work. Public/private partnerships, is how they can do it.”

In closing, Seaton made a request of the business leaders in the room.

“Get involved in the educational system in this area. I am the incoming chair of the National Board of Governors of the Boys and Girls Clubs of America. What got me involved in this about a decade ago was one statistic: 80 percent of the people incarcerated in America read at the fourth-grade level. If you’re looking at jobs numbers now, you know, we need people. It’s not just putting money in it. It’s being mentor, and giving your time and your talent, to the schools, who so definitely need it… All companies have a role in it. It’s people’s time that matters.”

Economists’ roundtable

Texas economist Ray Perryman predicted continued economic growth for Texas and the U.S.

“We’re looking at growth at the 2.6 to 2.7 percent range” in the U.S., he said. “We think we can add roughly 200,000 jobs a month to the economy, if we can fill them.”

Perryman said he foresees Texas’ economic growing at an annual rate of 3.7 percent annually.
“I agree with David (Seaton), who said the shale gas and oil play is changing the global markets, in fundamental ways,” Perryman said.

Cullum, meanwhile, said Amazon’s decision to locate HQ2 should serve as a wakeup call to the region.

“This has the potential to be a ‘Sputnik moment’ for Dallas and all the other cities that are watching,” Cullum said, adding that Amazon’s reason that the sites Amazon chose had to do with a readily available, modern workforce in Virginia and New York City. He said the decision should serve as a call to action to improve educational efforts in math and science.

Hobson Jr. – a long-time D.C. lobbyist — said while he thinks the potential for a major transportation bill being approved by legislators ended when tax cuts were adopted.

He also predicted that legislators might approve a prescription drug bill.

The summit’s presenting sponsor was Polsinelli; gold sponsor was Littler; silver sponsors included Blue Cross and Blue Shield of Texas; Fluor Corporation; and Southwest Airlines.