When Win Butler, lead singer for the indie rock band Arcade Fire, took the outdoor stage at the recent Austin City Limits Music Festival in Texas, he told the audience, "I don't know if we've ever prayed for rain before at a festival, but we are this time."

The sentiment is an entirely serious one in Austin, where a long-running drought, followed by literally thousands of wildfires, has cast an economic shadow in a region that hasn't had a whole lot to be anxious about in recent years.

"Thriving" is a word commonly associated with the city. While most of the country has wrestled with recession, job losses and housing angst, Austin -- along with the rest of Central Texas and even the state as a whole -- has been riding a wave of economic well-being. Companies are hiring. The population is growing. And real estate -- if not exactly booming -- is stable.

"We're in a good place," said Mark Sprague, director of business development for Mission Mortgage in Austin, in a forecast to a group of real estate and lending professionals in August. Sprague said the local housing market had bottomed out, and that the economy is outperforming the nation as a whole on several fronts, according to coverage of his speech by the Austin American-Statesman.

Examples of those robust fronts:

• the Rice University Kinder Institute for Urban Research in July placed Austin as the 11 th fastest-growing city nationwide by having added nearly half a million residents in the past decade, and predicted the metro would add 6,000 residents just between July and August of this year;
• the Federal Reserve Bank of Dallas has predicted that the metro area would add 7,000 to 11,000 jobs in 2011; and
• the city of Austin this year earned AAA ratings on its bonds from the three leading ratings agencies.

Besides being a hub for health care and pharmaceutical companies and a history that long has been built on cattle and agriculture, some of the "why" behind Austin's growth stems from the double presence of the state government and the 50,000-student campus of the University of Texas. Both are major employers, and the university churns out large numbers of well-educated graduates each year.

Those graduates (in addition to local venture-capital funding) have helped turn Austin into a technology hub in recent years. Dell Inc. is possibly the best-known tech firm based there, but the list is certainly growing. Online document provider LegalZoom; Coremetrics, a unit of IBM; Facebook; Samsung; Web-hosting firm HostGator; and eBay all have operations there, in addition to dozens of startups.

The supply of trained tech workers, however, isn't keeping up with local demand: Execs from 30 area high-tech companies went on a collective recruiting trip to Northern California in September.

Locals make no secret of aspiring to be the "next Silicon Valley," with Austin's image aided in no small measure by the annual Southwest Interactive component of Austin's South by Southwest annual festivals of film, music and technology.

Forbes magazine recently opined that Austin has a secret weapon in this quest: California-like ambiance at a fraction of the cost. Known for its "Keep Austin Weird" movement that promotes a bohemian (by Texas standards, anyway) lifestyle supplemented by a renowned music scene, Austin also has at least one thing that Northern California lacks -- housing costs that don't break the bank.

The Austin Board of Realtors reported a median home-sale price in August of $200,000; the average price, it said, was $261,273. Those prices are essentially unchanged from August, 2010, testament to a comparatively stable market. The Austin Realtors reported the average number of days on market for single-family homes was 79 in August; pending sales for single-families were up 19 percent, year over year.

Despite all the generally positive economic activity, however, some worries began to emerge this summer.

Several economists reported that the sagging national economy had begun a downward pull on Texas. Although year-over-year job growth remained positive, the state's employment remained flat most of the summer, according to the Texas Workforce Commission, a state agency.

In June, the government and private sectors lost 1,1000 and 1,600 jobs, respectively, the commission said. In August, it reported that the government sector had shed 600 jobs in Austin; the government accounts for 22 percent of jobs in Central Texas.

At about the same time, the heat and drought rolled in, followed by the wildfires.

As of Sept. 18, the Austin-Mabry area had seen 85 100-degree days this year, setting a record, according to federal reports. The accompanying drought -- about 8 inches of rain, less than half the annual norm -- took a devastating toll on agriculture statewide, to the tune of $5 billion, according to researchers at Texas A&M University. It has taken with it half of the state's cotton crop and the entire hay crop, and cattle ranchers, unable to support their herds, are selling them off. The dryness also bodes ill for winter-wheat production.

Then came the fires -- more than 21,900 of them, Texas-wide, burning through 3.7 million acres, according to the Texas Forest Service. Forestry losses amounted to the tens of millions of dollars, and the fires took out more than 2,600 Texas homes -- about 1,500 of them in the so-called Bastrop fire, near Austin, which burned through 33,000 acres in early September. Two people died in the Bastrop fire.

But after the immediate tragedy subsides, the region will rebuild, according to observers in the real estate industry.

"The demand created by the destruction of 1,500 homes in Bastrop alone will be very noticeable -- it roughly equates to 12 percent of our inventory in our regional (multiple listing service)," according to Sharon Stanberry Rosshirt, president of Stanberry & Associates, a brokerage in Austin.

"We expect that some of the displaced homeowners and renters will rebuild in Bastrop, and others will move away from what promises to be a chaotic scene for some time," she said in response to an inquiry from Inman News. "Many may take insurance settlements and start fresh elsewhere, but we expect the moves to be within Bastrop County or nearby communities in Central Texas.

"Rental properties in the area are being scooped up, and there was not much inventory available before the fire," she said. "There will be lots of work for people involved in removal of debris, construction and building, and selling real estate."