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U.S. & Florida Economic Update
Orlando, FL
January 30th, 2013
U.S. Forecast
U.S. Forecast § A Pall of Uncertainty Hangs Over
the Economy
§ Health Care Reform § Impact on labor market
§ Dodd-Frank Financial Regulatory Reform § Impact on credit flows
§ Fiscal Cliff § Little resolved with lame duck
agreement
§ Euro
U.S. Forecast § A recent paper has created an
index that quantifies economic policy uncertainty and analyzes its economic impact:
§ Measuring Economic Policy Uncertainty By Scott R. Baker Nicholas Bloom, and Steven J. Davis
U.S. Forecast § The index has three components:
1. Newspaper coverage of policy-related economic uncertainty.
2. Number of federal tax code provisions set to expire in future years
3. Disagreement among economic forecasters
(Survey of Professional Forecasters)
U.S. Forecast § The economic impact of economic
policy uncertainty
The results of the statistical analysis in the paper show that higher policy uncertainty causes:
1. Lower private investment 2. Lower industrial production 3. Much lower employment
Economic Policy Uncertainty Index
U.S. Forecast
§ Sky Mall™ Policy:
§ An Expensive Policy that Fails to Achieve its Desired Outcome
U.S. Forecast § Sky Mall™ Policies:
§ American Reinvestment and Recovery Act of 2009
§ Aka Stimulus Act
Why Didn’t the Stimulus Act Work?
§ The Nun
§ The Nobel Prize Winner
§ Non-starter Stimulus
Why Didn’t the Stimulus Act Work?
U.S. Forecast
§ Depleted Housing Wealth
§ Still Weak Labor Market
§ A continuing ballast on consumer spending
U.S. Household Wealth (Trillions of $)
2005 2006 2007 2008 2009 Q1* 2012 Q3
Total Assets 71.3 78.6 79.5 66.6 62.8 78.2
Financial Assets 42.9 49.0 51.4 42.2 39.6 53.6
Home Equity 13.2 12.8 10.3 7.0 6.1 7.7
Net Worth 59.1 65.1 65.1 52.4 48.7 64.8
U.S. Forecast
161514131211100908070605040302010099
145.0
140.0
135.0
130.0
125.0
Total Nonfarm Payroll Employment(Millions)
Total Nonfarm Employment
U.S. Forecast
161514131211100908070605040302010099
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
Civilian Unemployment Rate(%)
Unemployment Rate
U.S. Economic Outlook
2012 Q3
2012 Q4
2013 Q1
2013 Q2 2013 2014
GDP % Change, Annual Rate 3.1 -0.1 1.3 2.0 1.9 2.5
Consumer Price Index % Change, Annual Rate 2.1 0.2 0.4 1.3 1.5 1.8
Consumer Sentiment 75.0 79.4 77.8 81.1 80.1 83.1
Consumption % Change, Annual Rate 1.6 2.2 1.6 2.0 1.8 2.5
A Slippery Subject § Greece and the Euro
§ Greek bailouts, haircut & the election stays of execution and not pardons
§ Contagion concerns (PIIGS)
§ Euro still facing greatest threat since inception
§ Two possible outcomes for the Euro zone
in the long run.
The Euro and the Tacoma Narrows Bridge
A Slippery Subject
Florida’s Housing Market
§ Housing market showing signs of life
§ Has housing market found a solid bottom for prices?
§ A Tale of Two Markets
§ Distressed vs. Traditional § Investor role in distressed market
Florida Forecast
Florida Forecast
15141312111009080706050403020100
300.0
250.0
200.0
150.0
100.0
50.0
0.0
9%
8%
7%
6%
5%
4%
3%
Florida Housing Starts(thousands)
Total Private Housing Starts30 year Mortgage Rates
Florida Forecast
Florida Forecast
§ In 2010 the economic recovery began
• Real GSP growth 1.4% that year
• In 2011 the economy limped further along • 1.3% Real GSP growth
§ In 2012 we expect 1.6% growth
§ Job growth has limped alongside but only starting late in 2010.
Florida Forecast
§ Economic and job growth doesn’t gain significant altitude until 2014 and 2015
§ Real GSP growth:
§ 2014 = 3.3% § 2015 = 4.0%
Florida Forecast
15141312111009080706050403020100
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
Florida Real Gross State Product(% change year ago)
Florida Forecast
15141312111009080706050403020100
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
15141312111009080706050403020100
8200.0
8000.0
7800.0
7600.0
7400.0
7200.0
7000.0
6800.0
Florida Employment(Thousands)
Wage & Salary Employment
Florida Forecast
15141312111009080706050403020100
1400.0
1300.0
1200.0
1100.0
1000.0
900.0
800.0
Florida Professional & Business Services Employment
(Thousands)
Florida Forecast
15141312111009080706050403020100
700.0
600.0
500.0
400.0
300.0
200.0
Florida Construction Employment(Thousands)
Florida Forecast
15141312111009080706050403020100
1050.0
1000.0
950.0
900.0
850.0
Florida State & Local Government Employment
(Thousands)
Florida Forecast
15141312111009080706050403020100
1050.0
1000.0
950.0
900.0
850.0
800.0
Florida Leisure & Hospitality Employment
(Thousands)
Region Population Growth Average % Chg Rank
Florida 1.6 --- Deltona 1.4 7
Gainesville 0.9 12 Jacksonville 1.5 6
Lakeland 1.3 8 Miami 1.5 5 Naples 2.4 1 Ocala 1.9 3
Orlando 2.1 2 Palm Bay 1.3 9 Pensacola 0.9 11
Tallahassee 1.2 10 Tampa 1.6 4
2013-2016 Averages; Q4 2012 Forecast
Region Employment Growth Average % Chg Rank
Florida 2.4 --- Deltona 2.3 6
Gainesville 1.2 12 Jacksonville 2.4 4
Lakeland 2.2 8 Miami 2.2 7 Naples 3.1 1 Ocala 2.9 2
Orlando 2.7 3 Palm Bay 2.2 9 Pensacola 1.8 10
Tallahassee 1.4 11 Tampa 2.4 5
2013-2016 Averages; Q4 2012 Forecast
Sean M. Snaith, Ph.D.
Director
Institute for Economic Competitiveness
(407) 823-1453
Sean@SeanSnaith.com
WWW.IEC.UCF.EDU
www.facebook.com/seansnaith
Twitter: @seansnaith
Thank you
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