The 2014 Economy:Back to the Future (or maybe back to the early 90’s)

R. Christopher Jones, Ph.D.

2

What did 2013 offer us (the U.S.)?

An economy that is still growing.. Recession technically over June 2009

16 out of 17 quarters with positive real GDP growth since Q3 2009

Unemployment at lowest point in 5 years (7%) Retail sales growth relatively solid Growth in industrial production and capacity

utilization Interest rates still low, and we have avoided

inflation 29.2% growth in S&P 500

3

What else did it bring?

Not all the news was great.. We created 1.08 million jobs in 2013

Fewest net jobs created since 2010 Increasing Federal debt and expansive

monetary policy continue to spark fears of inflation

International debt crisis still threatens monetary and economic stability

Marginal growth in housing starts

4

What about Florida?

Growth has returned, but not “2000’s style” growth Best job growth in since 2005 (159k) Unemployment dropped 1.6 percent in 2013, to

lowest rate in 5 ½ years (6.2 percent) Housing starts are increasing (34% growth in

2013) Home values beginning to move upward All major regional markets seem to have

awakened from the economic coma

5

U.S. Real GDP 1950-2013 (Chained 2009 Dollars)

$1,000$2,000$3,000$4,000$5,000$6,000$7,000$8,000$9,000

$10,000$11,000$12,000$13,000$14,000$15,000$16,000

Q3

50

Q3

53

Q3

56

Q3

59

Q3

62

Q3

65

Q3

68

Q3

71

Q3

74

Q3

77

Q3

80

Q3

83

Q3

86

Q3

89

Q3

92

Q3

95

Q3

98

Q3

01

Q3

04

Q3

07

Q3

10

Q3

13

Bill

ion

s

6

U.S. Real GDP Annualized % Growth

1950-2013

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%Q

3 50

Q3

53

Q3

56

Q3

59

Q3

62

Q3

65

Q3

68

Q3

71

Q3

74

Q3

77

Q3

80

Q3

83

Q3

86

Q3

89

Q3

92

Q3

95

Q3

98

Q3

01

Q3

04

Q3

07

Q3

10

Q3

13

7

U.S. Unemployment Rate 1959-2013

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

%

8

U.S. Housing Starts (SAAR) 1960-2013

400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,600

000'

s

9

Real Retail & Food Svcs. Sales 1992-2013

$115$120$125$130$135$140$145$150$155$160$165$170$175$180$185$190

Bill

ion

s

10

Inflation (CPI-U) 1970-2013

30.0

70.0

110.0

150.0

190.0

230.0

11

Real Per Capita Disposable Personal Income 1960-2013

$8,000$10,000$12,000$14,000$16,000$18,000$20,000$22,000$24,000$26,000$28,000$30,000$32,000$34,000$36,000$38,000

Ma

y-6

0

Ma

r-6

2

Ja

n-6

4

No

v-6

5

Se

p-6

7

Ju

l-6

9

Ma

y-7

1

Ma

r-7

3

Ja

n-7

5

No

v-7

6

Se

p-7

8

Ju

l-8

0

Ma

y-8

2

Ma

r-8

4

Ja

n-8

6

No

v-8

7

Se

p-8

9

Ju

l-9

1

Ma

y-9

3

Ma

r-9

5

Ja

n-9

7

No

v-9

8

Se

p-0

0

Ju

l-0

2

Ma

y-0

4

Ma

r-0

6

Ja

n-0

8

No

v-0

9

Se

p-1

1

Ju

l-1

3

12

Credit Market Debt Per Capita 1961-2013 (infl. adj.)

$5,000$10,000

$15,000$20,000

$25,000$30,000

$35,000$40,000

$45,000$50,000

13

Consumer Sentiment 1980-2013

50.060.070.080.090.0

100.0110.0120.0

14

Federal Debt 1971-2013

$0$2,000$4,000$6,000$8,000

$10,000$12,000$14,000$16,000$18,000

Bill

ion

s

Domestic Foreign

15

2014 U.S. Forecast Growth continues, real GDP will grow by 3% -

3.25% Modest job growth continues, unemployment

finish out the year around 5.3% - 5.5% Stock markets grow by 7% - 10% Inflation concerns still can’t be ignored, nor can

the international debt crisis Is there a “boom” period ahead in the short

run? Not likely – but probably no collapse, either

16

Florida: The Facts

Florida has added 623,100 jobs since July 2010 Represents 11.9 percent of all U.S. jobs created during

this period The net job gains (623.1k) represent two-thirds of the

job losses experienced during the recession (930,800) Dec. 2012 – Nov. 2013: Gained 159,400 jobs 6.2% unemployment (Nov. 2013) 52,081 housing starts first 11 mos. of 2013, compared

to 38,758 in 2012 and 29,324 in 2011 Home prices have increased by 8.4 percent in the past

year

1717

Florida Real GDP(millions of chained 2005 dollars)1997-2012

$470,000

$520,000

$570,000

$620,000

$670,000

$720,000

1818

Florida Employment (000s)1990-2013

5,0005,5006,0006,5007,0007,5008,0008,5009,000

1919

Florida Unemployment Rate 1982-2013

2.03.04.05.06.07.08.09.010.011.012.0

%

2020

Florida Housing Starts1988-2013

02,0004,0006,0008,00010,00012,00014,00016,00018,00020,00022,000

2121

Florida Home Price Index (Q1 1980 = 100)1988-2013

100150200250300350400450500

2222

Florida Home Ownership Rate1984-2012

63

65

67

69

71

73

%

2323

Leading Index for Florida1988-2013

S1-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2424

FL Employment By Region 1990-2013 (000s)

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

M i ami

Or l ando

T ampa

J ax

2525

FL Unemployment Rate by Region1990-2013

2.03.04.05.06.07.08.09.010.011.012.013.0

Miami

Orlando

Tampa

J ax

5

2626

FL Housing Starts By Region1990-2013

0

400

800

1, 200

1, 600

2, 000

2, 400

2, 800

3, 200

3, 600

4, 000

4, 400

Miami

Orlando

Tampa

J ax

2727

FL Consumer Distress Index by Region (Financial Distress < 70)

2005-2013

56

61

6671

76

81

86

Miami

Orlando

Tampa

J ax

28

What’s in Store for Florida? More job growth, lower unemployment

But the growth will be modest Florida’s economic picture today looks a lot like the

early 1990’s Are we ever going to see a full recovery of the

housing sector? Depends on how you define “full recovery” If you use 2000’s criteria, no

All areas are moving forward again SE Florida will create the most jobs (most diverse

economy)