An Economic Outlook Orlando, FL April 13 th, 2012 Central Florida Chapter FGFOA.

An Economic Outlook

Orlando, FL

April 13th, 2012

Central Florida Chapter FGFOA

U.S. Forecast Gone Wilde

Oscar Wilde 1854-1900

U.S. Forecast Are We Experiencing a Dorian

Gray Recovery?

Are the Sins, Transgressions and Policy Missteps Before, During, and in the Wake of the Great Recession Appearing on the Visage of the U.S. Economy?

U.S. Forecast

“Sooner or later we have all to pay for what we do.”

Oscar Wilde An Ideal Husband

U.S. Forecast

Lost Wealth

Languishing Labor Market

A downward force on consumer spending

U.S. Household Wealth(Trillions of $)

2005 2006 2007 20082009 Q1*

2011 Q4

Total Assets 71.3 78.6 79.5 66.6 62.8 72.2

Financial Assets

42.9 49.0 51.4 42.2 39.6 49.1

Home Equity 13.2 12.8 10.3 7.0 6.1 6.1

Net Worth 59.1 65.1 65.1 52.4 48.7 58.4

U.S. Economic Outlook

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

GDP% Change, Annual Rate 0.4 1.3 1.8 3.0 2.0 1.9

Consumer Price Index% Change, Annual Rate 5.2 4.1 3.1 1.1 2.6 1.8

Consumer Sentiment 73.1 71.9 59.6 65.3 71.6 72.2

Consumption% Change, Annual Rate 2.1 0.7 1.7 2.1 2.0 1.9

141312111009080706050403020100999897

11.0

10.0

9.0

8.0

7.0

6.0

5.0

4.0

Automobile and Light Truck Sales(Millions Vehicles)

Auto SalesLight Truck Sales

U.S. Forecast

151413121110090807060504030201009998

145.0

140.0

135.0

130.0

125.0

120.0

Total Nonfarm Payroll Employment(Millions)

Total Nonfarm Employment

U.S. Forecast

151413121110090807060504030201009998

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

Civilian Unemployment Rate(%)

Unemployment Rate

U.S. Forecast

Two Slippery Subjects (Again)

Greece and Oil

Greek Haircut

Contagion concerns (PIIGS) remain – Spain and Italy

Euro still facing greatest threat since inception

U.S. Forecast

The Euro and the Tacoma Narrows Bridge

U.S. Forecast The Arithmetic of Higher Oil

Prices:

Each $1 increase in the price of a barrel of oil will:

Increase price of gallon of gas 2.5 cents Push consumer gasoline bills up $3 billion Raise the CPI 0.03% Lower real disposable income 0.25%

U.S. Forecast The Economics of Higher Oil

Prices:

Each permanent $10 increase in the price of a barrel of oil will:

Lower forecast real GDP growth 0.2% in 1st year,

0.5% in the 2nd

Lower forecast of payroll employment 110,000 in 1st year and 390,000 in 2nd

Psychic Impact of $3 or $4 of $5 per gallon gasoline

151413121110090807060504030201009998

140.0

120.0

100.0

80.0

60.0

40.0

20.0

0.0

120

110

100

90

80

70

60

50

Oil and Consumer ConfidenceOil ($ Per Barrel) - Left Axis

Price of Oil WTI Consumer Sentiment

U.S. Forecast

U.S. Forecast

Did the debt downgrade put an end to Sky Mall™ Policies?

Sky Mall™ Policy:

An Expensive Policy that Fails to Achieve its Desired Outcome

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. ForecastSky Mall™ Policies:

ARRA of 2009Shovel ready projects?

Health Care ReformCommunity Living Assistance Services and Supports ended.Constitutionality of mandate

HIRE Act 2010American Jobs Act?

U.S. Forecast

14131211100908070605040302010099989796

40.0

30.0

20.0

10.0

0.0

-10.0

Money Supply(Annual Growth Rate %)

Annual Growth Rate of M2Annual Growth Rate of M1

U.S. Forecast

141312111009080706050403020100999897

6.0

4.0

2.0

0.0

-2.0

Consumer Prices(% Change Year Ago)

Consumer Price IndexCore Consumer Price Index

Chang and Eng Bunker

Economic Siamese Twins:

The Labor Market

The Housing Market

U.S. Forecast

Florida’s Housing Market

Foreclosure Moratorium Delayed Recovery

Housing market still struggling to find the bottom

Tale of Two Markets

Distressed vs. Traditional

Florida Forecast In 2010 the recovery began

• 2012 is our new runway Heavy crosswinds in 2011 necessitated the

runway change Europe Debt Ceiling/ Debt Downgrade

Job growth doesn’t takeoff until 2013 and 2014

Turbulence Demographics hinder recovery Housing market Budget challenges: State & local government

Florida Forecast

15141312111009080706050403020100

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

Florida Real Gross State Product(% change year ago)

Florida Economic Outlook IEC 1st Quarter 2012 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 Economic Outlook IEC 1st Quarter 2012 Forecast

Florida Economic Outlook IEC 1st Quarter 2012 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 Economic Outlook IEC 1st Quarter 2012 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 Economic Outlook IEC 1st Quarter 2012 Forecast

15141312111009080706050403020100

700.0

600.0

500.0

400.0

300.0

200.0

Florida Construction Employment(Thousands)

Florida Economic Outlook IEC 1st Quarter 2012 Forecast

15141312111009080706050403020100

1300.0

1200.0

1100.0

1000.0

900.0

800.0

Florida Professional & Business Services Employment

(Thousands)

Florida Economic Outlook IEC 1st Quarter 2012 Forecast

15141312111009080706050403020100

1200.0

1150.0

1100.0

1050.0

1000.0

950.0

900.0

850.0

800.0

750.0

Florida Education & Health Services Employment

(Thousands)

Florida Economic Outlook IEC 1st Quarter 2012 Forecast

15141312111009080706050403020100

1050.0

1000.0

950.0

900.0

850.0

Florida State & Local Government Employment

(Thousands)

RegionPopulation Growth

Average % Chg Rank

Florida 1.4 ---Deltona 0.9 8

Gainesville 0.8 9Jacksonville 1.5 3

Lakeland 1.4 4Miami 1.3 5Naples 2.0 1Ocala 1.9 2

Orlando 2.0 1Palm Bay 1.3 5Pensacola 1.1 7

Tallahassee 1.3 5Tampa 1.2 6

2012-2015 Averages;Q1 2012 Forecast

RegionEmployment Growth

Average % Chg Rank

Florida 2.0 ---Deltona 2.0 4

Gainesville 0.8 10Jacksonville 2.2 3

Lakeland 1.7 6Miami 1.8 5Naples 2.5 1Ocala 2.4 2

Orlando 2.2 3Palm Bay 1.6 7Pensacola 1.1 8

Tallahassee 1.0 9Tampa 2.0 4

2012-2015 Averages;Q1 2012 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

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Thank you