An Economic Outlook The State of the Economy in Florida Orlando, FL August 12 th , 2011
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Transcript of An Economic Outlook The State of the Economy in Florida Orlando, FL August 12 th , 2011
An Economic Outlook
The State of the Economy in Florida
Orlando, FLAugust 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 2006 2007 2008 2009 Q1
2011 Q1
Total Assets 71.6 77.5 78.5 65.5 62.8 71.9
Financial Assets 43.3 47.9 50.6 41.2 39.6 48.8
Home Equity 13.2 12.8 10.3 6.9 6.1 6.1
Net Worth 59.5 64.0 64.2 51.3 48.7 58.1
U.S. Economic Outlook
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
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
141312111009080706050403020100999897
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
Automobile and Light Truck Sales(Millions Vehicles)
Auto SalesLight Truck Sales
U.S. Forecast
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. ForecastSky Mall™ Policies:
T.A.R.P.Foreclosure Prevention Act 2009ARRA of 2009
Shovel ready projects?Making work pay tax breaks
Health Care ReformHIRE 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?
141312111009080706050403020100999897
500.0
0.0
-500.0
-1000.0
-1500.0
Federal Budget Surplus(Billions of Dollars)
Federal Budget Surplus
U.S. Forecast
141210080604020098969492908886848280
120%
100%
80%
60%
40%
20%
U.S. Debt to GDP RatioNot Quite Greece...yet.
Greek Debt to GDP Ratio: 115%
U.S. National Debt to GDP Ratio
U.S. Forecast
141210080604020098969492908886848280
5%
1%
-3%
-8%
-12%
-16%
U.S. Deficit to GDP RatioNot quite Greece
Greek Budget Defict to GDP Ratio: -15%
U.S. Deficit to GDP Ratio
U.S. Forecast
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 BondsBillions of Dollars
Dec. 1984
Jun. 2005
Jun. 2006
Jun. 2008
Jun. 2009
Jun.2010
Total outstanding
1515 3093 3321 3621 4591 6302
Foreign-owned
333 1599 1727 2211 2604 3343
Percent foreign-owned
22.0 51.7 52.0 61.1 56.7 53.0
Percent foreignofficial
56.0 67.5 70.2 76.2 78.9 78.3
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 $5 per gallon gasoline
141312111009080706050403020100999897
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
120
110
100
90
80
70
60
50
Oil and Consumer ConfidenceOil ($ Per Barrel) - Left Axis
Price of Oil WTI Consumer Sentiment
U.S. Forecast
141312111009080706050403020100999897
140.0
135.0
130.0
125.0
120.0
Total Nonfarm Payroll Employment(Millions)
Total Nonfarm Employment
U.S. Forecast
141312111009080706050403020100999897
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
Civilian Unemployment Rate(%)
Unemployment Rate
U.S. Forecast
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
Florida Forecast
14131211100908070605040302010099
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Florida Real Gross State Product(% change year ago)
Florida Forecast
14131211100908070605040302010099
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
Florida & U.S. Unemployment Rate(%)
FL Unemployment RateU.S. Unemployment Rate
Florida Forecast
14131211100908070605040302010099
8200.0
8000.0
7800.0
7600.0
7400.0
7200.0
7000.0
6800.0
6600.0
Florida Employment(Thousands)
Wage & Salary Employment
Florida Forecast
14131211100908070605040302010099
700.0
600.0
500.0
400.0
300.0
Florida Construction Employment(Thousands)
Florida Forecast
14131211100908070605040302010099
1300.0
1200.0
1100.0
1000.0
900.0
800.0
Florida Professional & Business Services Employment
(Thousands)
Florida Forecast
14131211100908070605040302010099
300.0
250.0
200.0
150.0
100.0
50.0
0.0
9%
8%
7%
6%
5%
4%
Florida Housing Starts(thousands)
Total Private Housing Starts30 year Mortgage Rates
Florida Forecast
14131211100908070605040302010099
1200.0
1150.0
1100.0
1050.0
1000.0
950.0
900.0
850.0
800.0
750.0
Florida Education & Health Services Employment
(Thousands)
Florida Forecast
14131211100908070605040302010099
1000.0
950.0
900.0
850.0
800.0
Florida State & Local Government Employment
(Thousands)
Florida Forecast
RegionPopulation Growth
Average % Chg Rank
Florida 1.4 ---Deltona 1.0 6
Gainesville 1.0 6Jacksonville 1.4 3
Lakeland 1.9 2Miami 1.3 4Naples 1.9 2Ocala 2.1 1
Orlando 1.9 2Palm Bay 1.2 5Pensacola 0.9 7
Tallahassee 1.3 4Tampa 1.4 3
2011-2014 Averages;Q2 2011 Forecast
RegionEmployment Growth
Average % Chg Rank
Florida 2.0 ---Deltona 1.8 6
Gainesville 1.2 8Jacksonville 2.2 3
Lakeland 1.9 5Miami 1.8 6Naples 2.6 1Ocala 2.0 4
Orlando 2.5 2Palm Bay 1.0 10Pensacola 1.5 7
Tallahassee 1.1 9Tampa 2.0 4
2011-2014 Averages;Q2 2011 Forecast
Sean M. SnaithSean M. Snaith, Ph.D.
Director Director
Institute for Economic CompetitivenessInstitute for Economic Competitiveness
(407) 823-1453(407) 823-1453
[email protected]@SeanSnaith.com
WWW.IEC.UCF.EDUWWW.IEC.UCF.EDU
www.facebook.com/seansnaith www.facebook.com/seansnaith
Twitter: @seansnaithTwitter: @seansnaith
Thank you