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An Economic Forecast Tampa, FL September 1st, 2015 The Rules of the Game Matter They change the way the players play the game. They can change the outcome of the game itself. Freeze tag The Rules of the Game Matter • Federal Regulation and Aggregate Economic Growth by John W. Dawson and John J. Seater • Journal of Economic Growth (2013) 18:137-177 Examined Economic Growth and Productivity 1949-2005 The Rules of the Game Matter • Results: • Regulations have reduced real GDP growth an average of 2% per year. • Real GDP in 2005 would have been $53.9 trillion instead of the $15.1 trillion The Rules of the Game Matter • Results: • Productivity is impacted by regulatory growth • The conundrum of declining productivity in the 1970’s attributable to a doubling in the number of pages of regulation. The Rules of the Game Matter • 2013 CFR 175,000 • Dodd-Frank law 2,300 pages – 22,296 pages of rules so far – Another 13,000 on the way • Affordable Care Act The Rules of the Game Matter • Dan Gallagher, Commissioner of the SEC: • “And really, to me, Bob, the burden isn’t necessarily as much as the regulations that came from Dodd-Frank. Some of them are just completely nonsensical. I mean, nothing to do with the financial crisis, aren’t really germane to the function of the SEC and that’s what happens when you get a runaway piece of legislation.” Total Nonfarm Payroll Employment (Millions) 150.0 145.0 140.0 135.0 130.0 125.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Total Nonfarm Employment U.S. Forecast Payroll jobs to reach potential Civilian Unemployment Rate (%) 10.0 9.0 8.0 7.0 6.0 5.0 4.0 3.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Unemployment Rate U.S. Forecast 2015 Q1 2015 Q2 2015 Q3 0.6 2.9 1.9 2015 2016 2017 2018 2.2 2.6 2.7 2.5 Consumer Price Index % Change, Annual Rate -0.9 -3.1 -0.7 -0.3 2.1 2.4 2.6 Consumer Sentiment 95.5 94.2 92.2 94.1 92.6 92.3 92.6 GDP % Change, Annual Rate Consumption % Change, Annual Rate 2.5 2.9 2.4 3.0 3.0 2.7 2.6 Global Factors - Oil The Arithmetic of Lower Oil Prices: Each $1 decrease in the price of a barrel of oil will: Decrease price of gallon of gas 2.5 cents Push consumer gasoline bills down $3 billion Lower the CPI 0.03% Raise real disposable income 0.25% Global Factors - Oil The Economics of lower Oil Prices: Each permanent $10 decrease in the price of a barrel of oil will: Raise forecast real GDP growth 0.2% in 1st year, 0.5% in the 2nd Raise forecast of payroll employment 110,000 in 1st year and 390,000 in 2nd Psychic Impact Domestic production impacts? Global Factors - Eurozone Greece and the Euro All the Greek bailouts, haircut & the election are stays of execution and not pardons Euro still facing greatest threat since inception Two (long-run) possible outcomes for the Euro zone Global Factors - China Is the Chinese economy a pagoda of cards? Economy slowing Stock market plunge Desperate attempts to stop the decline Depreciation of the Yuan Global Factors - ROW IMF revised down 2015 world growth outlook: 3.3% 2016: 3.8% Brazil – worst recession in 25 years Latin America/Caribbean sub 2% outlook Canadian recession 1st half 2015 Stronger U.S. Dollar U.S. Forecast Will the Bankruptcy of Sky Mall Put an End to Sky Mall™ Policies? Sky Mall™ Policy: An Expensive Policy that Fails to Achieve its Desired Outcome U.S. Forecast U.S. Forecast U.S. Forecast U.S. Forecast U.S. Forecast U.S. Forecast Florida Housing Market Housing market recovery continues Double-digit price appreciation has returned Investors chasing shrinking pool of distressed properties Housing finance still an issue Housing Market Housing Finance Mortgage availability slowly improving Mortgages have been restricted by Dodd Frank Capital Standards Underwriting Standards Limited Private Securitization Demise of Mortgage Brokering U.S. Forecast Florida Housing Market Florida Housing Market Florida Housing Market June 2015 June 2014 Closed Sales 27,729 23,181 19.6% Median Sale Price $203,500 $185,000 10.0% Median Days on Market 47 57 -17.5% 4.6 5.6 -17.4% Inventory (Months Supply) Percent change Florida Forecast Florida Housing Starts (thousands) 300.0 8% 250.0 7% 200.0 6% 150.0 5% 100.0 50.0 4% 0.0 3% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Total Private Housing Starts 30 year Mortgage Rates Florida Forecast Florida Population (Thousands) 22000.0 21000.0 20000.0 19000.0 18000.0 17000.0 16000.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Florida Forecast Florida & U.S. Unemployment Rate (%) 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 FL Unemployment Rate U.S. Unemployment Rate Florida Forecast Florida Real Gross State Product (% change year ago) 10% 5% 0% -5% -10% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Florida Forecast Florida Employment (Thousands) 8600.0 8400.0 8200.0 8000.0 7800.0 7600.0 7400.0 7200.0 7000.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Wage & Salary Employment Florida Forecast Florida Construction Employment (Thousands) 700.0 600.0 500.0 400.0 300.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Florida Forecast Florida Professional & Business Services Employment (Thousands) 1400.0 1300.0 1200.0 1100.0 1000.0 900.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Florida Forecast Florida Leisure & Hospitality Employment (Thousands) 1200.0 1100.0 1000.0 900.0 800.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 2015-2018 Averages; Q2 2015 Forecast Florida Sector % Average Annual Growth Construction 7.9 Professional & Business Services 4.1 Trade, Transportation & Utilities 3.4 Education-Health Services 2.2 Leisure & Hospitality 1.9 State & Local Government Information Financial Manufacturing 0.9 0.7 0.5 0.4 2015-2018 Averages; Q2 2015 Forecast Region Population Growth Average % Chg Rank Florida 1.5 --- Deltona 1.2 7 Gainesville 0.8 12 Jacksonville 1.5 5 Lakeland 1.2 9 Miami 1.2 6 Naples 2.6 1 Ocala 1.7 3 Orlando 2.3 2 Palm Bay 1.2 7 Pensacola 0.9 11 Tallahassee 1.1 10 Tampa 1.6 4 2015-2018 Averages; Q2 2015 Forecast Region Employment Growth Average % Chg Rank Florida 2.2 --- Deltona 2.0 6 Gainesville 1.4 12 Jacksonville 1.8 9 Lakeland 1.8 8 Miami 2.0 5 Naples 3.3 1 Ocala 2.5 3 Orlando 3.0 2 Palm Bay 2.3 4 Pensacola 1.4 11 Tallahassee 1.5 10 Tampa 2.0 7 2015-2018 Averages; Q2 2015 Forecast Orlando Sector % Average Annual Growth Construction 7.9 Professional & Business Services 4.7 Trade, Transportation & Utilities 3.4 Leisure & Hospitality 2.6 Education-Health Services Financial Manufacturing Information State & Local Government 2.6 1.2 1.0 1.0 0.4 Thank you Sean M. Snaith, Ph.D. Director Institute for Economic Competitiveness (407) 823-1453 [email protected] WWW.IEC.UCF.EDU www.facebook.com/seansnaith Twitter: @seansnaith