an economic forecast in uncertain times orlando, fl may 22nd, 2014
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An Economic Forecast in Uncertain Times Orlando, FL May 22nd, 2014. U.S. Forecast. Policy Uncertainty Still Hangs Over the Economy Health Care Reform Impact on labor market Delayed mandates Dodd-Frank Financial Regulatory Reform Impact on credit flows & financial sector 45.7% (128) - PowerPoint PPT PresentationTRANSCRIPT
An Economic Forecast in Uncertain Times
Orlando, FLMay 22nd, 2014
U.S. Forecast
Policy Uncertainty Still Hangs Overthe Economy
Health Care Reform Impact on labor market Delayed mandates
Dodd-Frank Financial Regulatory Reform Impact on credit flows & financial sector 45.7% (128)
Fiscal “Cliff” Sequester, shutdown/debt ceiling…
Monetary Policy
U.S. Forecast The economic impact of economic
policy uncertainty
Statistical analysis shows that higher policy uncertainty causes:
1. Lower private investment2. Lower industrial production3. Much lower employment
Economic Policy Uncertainty Index
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
17161514131211100908070605040302010099
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
Civilian Unemployment Rate(%)
Unemployment Rate
U.S. Forecast
U.S. Forecast
U.S. Forecast
17161514131211100908070605040302010099
2800.0
2600.0
2400.0
2200.0
2000.0
1800.0
1600.0
1400.0
1200.0
Private Fixed Nonresidential Investment(Billions of Dollars)
Private Fixed Nonresidential Investment
U.S. Forecast
17161514131211100908070605040302010099
1300.0
1200.0
1100.0
1000.0
900.0
800.0
700.0
600.0
Real Investment Equipment & Software
(Billions of Dollars)
Real nonresidential investment-equipment & software
U.S. Forecast
Sky Mall™ Policy:
An Expensive Policy that Fails to Achieve its Desired Outcome
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. ForecastSky Mall™ Policies:
T.A.R.P.Foreclosure Prevention Act 2008ARRA of 2009
Shovel ready projectsMaking work pay tax breaks
Affordable Care ActDodd-FrankHIRE Act 2010
U.S. Forecast
Lost housing wealth
Weak labor market recovery
Both have weighed on consumers
“Mini age of austerity”
U.S. Household Wealth(Trillions of $)
2005 2006 2007 20082009 Q1*
2013 Q4
Total Assets 71.3 78.6 79.5 66.6 62.8 94.4
Financial Assets
42.9 49.0 51.4 42.2 39.6 66.9
Home Equity 13.2 12.8 10.3 7.0 6.1 10.0
Net Worth 59.1 65.1 65.1 52.4 48.7 80.6
U.S. Economic Outlook
2013Q3
2013Q4
2014Q1
2014 2015 2016
GDP% Change, Annual Rate 4.1 2.6 -0.8 2.4 2.6 2.9
Consumer Price Index% Change, Annual Rate 2.2 1.1 1.8 1.5 1.4 1.7
Consumer Sentiment 81.6 76.9 80.9 80.9 81.4 82.5
Consumption% Change, Annual Rate 2.0 3.3 2.7 2.3 2.6 2.9
Monetary Policy
The job of the Federal Reserve is to take away the punch bowl just as the party gets going
William McChesney MartinFormer Fed Chairman
U.S. Forecast
Florida Housing Market
Housing market recovery continues to unfold
Double-digit price appreciation
High level of investor activity
Housing finance still problematic
Will momentum be maintained?
Florida Housing Market
Florida Housing Market
February 2014
February 2013 Percent
change
Closed Sales 15,826 15,591 1.5%
Median Sale Price
$165,000 $150,000 10.0%
Median Days on Market
61 62 -1.6%
Inventory(Months Supply)
5.7 5.5 2.1%
Florida Housing Market
Florida Housing Market
Investors are still active in Florida residential real estate
Evidenced by high share of cash transactions
Private equity & hedge funds
Is this a good thing or a bad thing?
February 2014
February 2013
Cash as % of February
2014 Sales
Florida 7,596 7,928 48.0%
Miami 1,429 1,380 49.2%
Tampa 1,122 1,243 47.4%
Jacksonville 507 290 44.2%
Orlando695 847 41.4%
Housing MarketCash Sales
Housing MarketHousing Finance
Unsustainably high share of cash transactions
Mortgage availability has been restricted by
Dodd FrankCapital StandardsUnderwriting StandardsLimited Private SecuritizationDemise of Mortgage BrokeringShell shock
Is this a good thing or a bad thing?
Florida Forecast
171615141312111009080706050403020100
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
171615141312111009080706050403020100
21000.0
20000.0
19000.0
18000.0
17000.0
16000.0
15000.0
Florida Population(Thousands)
Florida Forecast
171615141312111009080706050403020100
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
171615141312111009080706050403020100
10%
5%
0%
-5%
-10%
Florida Real Gross State Product(% change year ago)
Florida Forecast
171615141312111009080706050403020100
8400.0
8200.0
8000.0
7800.0
7600.0
7400.0
7200.0
7000.0
6800.0
Florida Employment(Thousands)
Wage & Salary Employment
171615141312111009080706050403020100
1300.0
1200.0
1100.0
1000.0
900.0
800.0
Florida Professional & Business Services Employment
(Thousands)
Florida Forecast
171615141312111009080706050403020100
1400.0
1300.0
1200.0
1100.0
1000.0
900.0
800.0
Florida Professional & Business Services Employment
(Thousands)
Florida Forecast
171615141312111009080706050403020100
700.0
600.0
500.0
400.0
300.0
Florida Construction Employment(Thousands)
Florida Forecast
171615141312111009080706050403020100
1150.0
1100.0
1050.0
1000.0
950.0
900.0
850.0
800.0
Florida Leisure & Hospitality Employment
(Thousands)
2014-2017 Averages;Q1 2014 Forecast
Florida
Sector% Average Annual
Growth
Construction 8.7
Professional & Business Services 4.3
Trade, Transportation & Utilities 4.0
Education-Health Services 2.3
Leisure & Hospitality 1.9
Information 1.8Manufacturing 1.3Financial 0.8State & Local Government 0.6Federal Government -1.0
RegionPopulation Growth
Average % Chg Rank
Florida 1.4 ---
Deltona 1.1 8
Gainesville 0.4 12
Jacksonville 1.4 4
Lakeland 0.9 10
Miami 1.2 5
Naples 2.5 1
Ocala 1.7 3
Orlando 2.0 2
Palm Bay 0.9 11
Pensacola 0.9 9
Tallahassee 1.1 7
Tampa 1.2 6
2014-2017 Averages;Q4 2013 Forecast
RegionEmployment Growth
Average % Chg Rank
Florida 2.4 ---
Deltona 1.8 11
Gainesville 1.5 12
Jacksonville 2.2 6
Lakeland 1.9 9
Miami 2.3 4
Naples 4.3 1
Ocala 2.6 3
Orlando 3.0 2
Palm Bay 2.0 7
Pensacola 1.9 8
Tallahassee 1.9 10
Tampa 2.3 5
2014-2017 Averages;Q4 2013 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