old florida national bank economic update

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