Download The State of Florida`s Economy, Dr. Sean Snaith, Snaith Economic

An Economic Outlook
The State of the Economy in Florida
Orlando, FL
August 12th, 2011
U.S. Economic Outlook
2nd Quarter 2009 Forecast
U.S. Forecast
 Labor market, Stock Market
and Recession?
 Recovery Showing Some
Cracks
 Fiscal and Monetary Policy
Stimulus
 What now?
U.S. Forecast
 Tectonic Forces Impacting
Consumers:
 Pent-up Demand, Rising Incomes
 An upward force on consumer spending
 Lost Wealth, Labor Market
 Downward force on spending
U.S. Household Wealth
(Trillions of $)
2005
Total
Assets
Financial
Assets
Home
Equity
Net
Worth
2006 2007
2008
2009
Q1
2011
Q1
71.6 77.5 78.5 65.5
62.8
71.9
43.3 47.9 50.6 41.2
39.6
48.8
13.2 12.8 10.3
6.9
6.1
6.1
59.5 64.0 64.2 51.3
48.7
58.1
U.S. Economic Outlook
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
GDP
% Change, Annual Rate
2.3
0.4
1.3
1.2
1.5
2.4
Consumer Price Index
% Change, Annual Rate
2.6
5.2
4.1
2.0
0.8
1.4
Consumer Sentiment
71.3
73.1
71.9
61.2
64.1
67.4
Consumption
% Change, Annual Rate
3.6
2.1
0.1
1.3
1.3
2.3
U.S. Forecast
Automobile and Light Truck Sales
(Millions Vehicles)
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Auto Sales
Light Truck Sales
U.S. Forecast
 Will the debt downgrade put an
end to Sky Mall™ Policies in
Washington?
 Sky Mall™ Policy:
 An Expensive Policy that Fails to
Achieve its Stated Outcome
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
Sky Mall™ Policies:
T.A.R.P.
Foreclosure Prevention Act 2009
ARRA of 2009
Shovel ready projects?
Making work pay tax breaks
Health Care Reform
HIRE Act 2010
Two Slippery Subjects
 Greece and Oil
 Greece
 Contagion concerns (PIIGS)
abated?
 Financial market fear returned
 Euro facing greatest threat since
inception
 Is the U.S. “going Greek?”
 Debt Downgrade Proof?
U.S. Forecast
Federal Budget Surplus
(Billions of Dollars)
500.0
0.0
-500.0
-1000.0
-1500.0
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Federal Budget Surplus
U.S. Forecast
U.S. Debt to GDP Ratio
Not Quite Greece...yet.
120%
100%
Greek Debt to GDP Ratio: 115%
80%
60%
40%
20%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
U.S. National Debt to GDP Ratio
U.S. Forecast
U.S. Deficit to GDP Ratio
Not quite Greece
5%
1%
-3%
-8%
Greek Budget Defict to GDP Ratio: -15%
-12%
-16%
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
U.S. Deficit to GDP Ratio
Capital Flows
into the U.S.
• Foreign countries have purchased
U.S. government bonds at record
levels.
• Will this continue as the U.S. runs
deficits that are measured in the
trillions of dollars?
• Could we see a return to
crowding out?
Foreign Ownership of US Treasury Bonds
Billions of Dollars
Dec.
1984
Jun.
2005
Jun.
2006
Jun.
2008
Jun.
2009
Jun.
2010
1515
3093
3321
3621
4591
6302
Foreignowned
333
1599
1727
2211
2604
3343
Percent
foreignowned
22.0
51.7
52.0
61.1
56.7
53.0
Percent
foreign
official
56.0
67.5
70.2
76.2
78.9
78.3
Total
outstanding
U.S. Forecast
 The Arithmetic of Higher(Lower)
Oil Prices:
 Each $1 increase in the price of a
barrel of oil will:




Increase price of gallon of gas 2.5 cents
Push consumer gasoline bills up $3 billion
Raise the CPI 0.03%
Lower real disposable income 0.25%
U.S. Forecast
 The Economics of Higher
(Lower) Oil Prices:
 Each permanent $10 increase in the
price of a barrel of oil will:
 Lower forecast real GDP growth 0.2% in 1st
year, 0.5% in the 2nd
 Lower forecast of payroll employment 110,000
in 1st year and 390,000 in 2nd
 Psychic Impact of $3 or $4 of $5 per
gallon gasoline
U.S. Forecast
Oil and Consumer Confidence
Oil ($ Per Barrel) - Left Axis
140.0
120
120.0
110
100.0
100
80.0
90
60.0
80
40.0
70
20.0
60
0.0
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Price of Oil WTI
Consumer Sentiment
50
U.S. Forecast
Total Nonfarm Payroll Employment
(Millions)
140.0
135.0
130.0
125.0
120.0
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Total Nonfarm Employment
U.S. Forecast
Civilian Unemployment Rate
(%)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Unemployment Rate
Chang and Eng Bunker
Florida Economic Outlook
 Florida’s Siamese Twins:
The Labor Market
The Housing Market
Florida’s Housing Market
Foreclosure Moratorium Delayed
Recovery
Housing market still struggling
to find the bottom for prices
Housing Market is a War
Policy has NOT been battlefield
triage.
A look at the housing
data:
January 1994–
June 2011
Florida Forecast
 Florida’s economy like a jumbo jet
 In 2010, we finished some repairs, loaded
up and pushed back from the gate and
slowly taxied to the runway.
Florida Forecast
 2011 is our
runway.
 And we are cleared
for takeoff – finally.
 As year progresses
we will pickup speed.
 Did the runway just get
longer???
Florida Forecast
 Economic and job growth doesn’t gain
significant altitude until 2012 and
2013
Florida Forecast
Florida Real Gross State Product
(% change year ago)
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Florida Forecast
Florida & U.S. Unemployment Rate
(%)
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
FL Unemployment Rate
U.S. Unemployment Rate
Florida Forecast
Florida Employment
(Thousands)
8200.0
8000.0
7800.0
7600.0
7400.0
7200.0
7000.0
6800.0
6600.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Wage & Salary Employment
Florida Forecast
Florida Construction Employment
(Thousands)
700.0
600.0
500.0
400.0
300.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Florida Forecast
Florida Professional & Business
Services Employment
(Thousands)
1300.0
1200.0
1100.0
1000.0
900.0
800.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Florida Forecast
Florida Housing Starts
(thousands)
300.0
9%
250.0
8%
200.0
7%
150.0
6%
100.0
5%
50.0
0.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Total Private Housing Starts
30 year Mortgage Rates
4%
Florida Forecast
Florida Education & Health
Services Employment
(Thousands)
1200.0
1150.0
1100.0
1050.0
1000.0
950.0
900.0
850.0
800.0
750.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Florida Forecast
Florida State & Local Government
Employment
(Thousands)
1000.0
950.0
900.0
850.0
800.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
2011-2014 Averages;
Q2 2011 Forecast
Region
Florida
Deltona
Gainesville
Jacksonville
Lakeland
Miami
Naples
Ocala
Orlando
Palm Bay
Pensacola
Tallahassee
Tampa
Population Growth
Average % Chg
Rank
1.4
1.0
1.0
1.4
1.9
1.3
1.9
2.1
1.9
1.2
0.9
1.3
1.4
--6
6
3
2
4
2
1
2
5
7
4
3
2011-2014 Averages;
Q2 2011 Forecast
Region
Florida
Deltona
Gainesville
Jacksonville
Lakeland
Miami
Naples
Ocala
Orlando
Palm Bay
Pensacola
Tallahassee
Tampa
Employment Growth
Average % Chg
Rank
2.0
1.8
1.2
2.2
1.9
1.8
2.6
2.0
2.5
1.0
1.5
1.1
2.0
--6
8
3
5
6
1
4
2
10
7
9
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