tony villamil florida entered the new year with strong economic momentum: a positive environment...
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Tony Villamil
www.weg.com
Florida Entered the New Year with Strong Economic Momentum:A Positive Environment for South Florida Real Estate
Economic Outlook: It’s the Economy! Get Smart on What to Expect in 2015
January 28, 2015
Economic Drivers and Long-Term Fundamentals of South Florida* are Mostly Positive for 2015 and Beyond
US Economic Activity/ Financial Indicators
Global Economic Performance
Florida Business Climate
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South FloridaFundamentals
West Palm Beach
Broward
Miami-Dade
*Comprised of Miami-Dade, Broward and Palm Beach Counties.
Economic Driver Outlook 2015
Florida “Operating on All Cylinders” as we Enter 2015:US and Global Economies, Together with State Business Climate,
are Key Drivers of South Florida
US Economy
Economy growing at 3% plus this year: Positive for key industries of Florida and South Florida such as Wholesale Trade, Construction, Retail, Tourism, Professional Services and Manufacturing
Florida Business Climate
Pro-growth Governor and Legislature. Election results solidify top business climate. Low and stable taxes, positive fiscal situation, aggressive recruitment, retention and expansion of companies by Governor/EFI
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Global EconomyA mixed performance continuing in 2015. Euro Zone slow growth. Canada, Asia and most of Latin America countries experiencing moderate growth
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Household Net Worth: Positive for Consumer Spending Increasing in 2015
2008 2009 2010 2011 2012 2013 2014-Q1 2014-Q2 2014-Q3$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$57 $58
$63 $64
$70
$79 $80 $81 $81
$ Tr
illio
n
Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
Up$24 Trillion
Since ‘08
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Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
US Non-Financial Debt: Households Borrowing Prudently, Business Debt Growing
Years Households Business State & Local Governments Federal
Financial and Housing “Bubbles”
200520062007
11.29.76.7
9.010.913.6
5.83.95.5
7.03.94.9
The “Great Recession” and the Aftermath
200820092010201120122013
-0.2-1.7-2.6-1.50.21.5
6.3-2.3 1.54.76.05.1
0.64.02.3-1.7-0.2-1.3
24.222.720.211.410.96.5
2014:Q12014:Q22014:Q3
2.33.42.7
6.05.05.2
-1.31.2-2.8
6.02.57.2
KeynesLives!
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Monetary Base: Record Breaking Growth:Exit Strategy of FED Keeps Me “Awake in Miami!”
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$ B
illio
ns
Source: Federal Reserve Bank of St. Louis Economic Research. Jan 2002-Dec 2014. Shaded areas indicate US Recessions.
From Q
E1 to Q
E3!
AmpleLiquidity
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Velocity of M2 Money Stock: Opportunity Cost of Holding Money is Very Low
Source: Federal Reserve Bank of St. Louis Economic Research. Q1:2002-Q3:2014. Shaded areas indicate US recessions.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20141.5
1.6
1.7
1.8
1.9
2.0
2.1
Ratio
US Economic Activity Likely to Gain Moderate Momentum in 2015:A Positive Development for South Florida Real Estate Industries
Sources: BEA and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
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2009 2013 2014E 2015F-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
-3.5%
2.0%2.5%
3.0%
US Real GDP Growth(Annual Average)
"Great Recession"
Global Economy Continues to Underperform Again in 2015:But There are Significant Country Differences
Source: International Monetary Fund, World Economic Outlook, January 20, 2015 Revision.
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2009 2013E 2014E 2015F-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
-1.0%
3.3% 3.3%3.5%
World Output Growth(Annual Average)
"Great Reces-sion"
Top Business Climate, Low-Interest Rates and Declining Energy Prices are Propelling Florida and
South Florida to Another Strong Economic Year
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Florida’s Real GDP Growing Faster than National Average: State Likely to Grow Faster than Texas this Year!
Sources: Bureau of Economic Analysis and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
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2009 2013 2014E 2015F-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
-5.0%
2.2%3.1%
3.5%
Florida’s Real GDP Growth(Annual Average)
"Great Recession"
Economic Activity Accelerated in South Florida During 2014:
Additional Gains Expected this Year
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South Florida Payroll Employment Growth Rose Strongly in 2014: Continued Solid Growth Expected this Year in a Variety of Industries
Category Dec 2013Employment
Dec 2014Employment
Over the Year Change
Over the Year % Change
Total Payroll Employment 2,414,400 2,487,200 +72,800 3.0%
Total Private 2,105,500 2,177,200 +71,700 3.4%
Trade, Transportation & Utilities 575,500 590,600 +15,100 2.6%
Professional & Business Services 378,700 396,700 +18,000 5.0%
Education & Health Services 352,700 363,100 +10,400 3.0%
Leisure & Hospitality 293,400 301,700 +8,300 3.0%
Financial Activities 167,300 172,700 +5,400 3.2%
Construction 97,200 104,900 +7,700 8.0%
Source: DEO, FREIDA, December 2014 Current Employment *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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South Florida* Housing Activity Consistent with Steady Growth:Preferably to “Boom and Bust”
Housing Indicators 2012 2013 2014
Housing Starts 11,477 17,225 21,311
Single-Family Home Sales 39,232 42,501 44,903
Median Single-Family Home Price ($) $202,200 $250,000 $265,000
Multifamily Home Sales 46,754 48,406 46,317
Multifamily Median Home Price ($) $103,000 $129,000 $145,000
Single-Family Homes (Months Supply Inventory) 4.9 4.9 5.4
Multifamily Homes (Months Supply Inventory) 5.4 5.9 6.8
Sources: Florida Realtors and US Census Bureau. *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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Global “Brand” positive for expansion of key South Florida industries
Corporate relocations and growing technology hub of State
Higher education cluster
MIA/Fort Lauderdale airports
Port of Miami post Panama ships
Long-Term Fundamentals of South Florida Remain Strong for 2015 and Beyond: Strengthening the Cyclical Upturn
Strong Fundamentals Strengthen the Outlook for A Strong 2015 Economic Year
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“Bottom Line” 2015
Florida likely to outperform National economy again this year
Top performing State among “The Big Four” South Florida has become a leading region of Florida
Continued low-interest rates, declining energy prices and pro-growth State, add to the fundamental strengths of Florida and South Florida
Downside risks to monitor:
FED Policy Euro Zone and Japan “malaise” Middle East The “Executive Order” WH
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Visit us at: www.weg.com
Twitter: @tonyvillamil
THANK YOU!
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