Recession and Recovery: A Look Into Our Economic Future First Coast Real Estate Economic Outlook Conference and Expo Jacksonville, FL March 23 rd, 2010.

Recession and Recovery:A Look Into Our Economic Future

First Coast Real Estate Economic Outlook Conference

and Expo

Jacksonville, FLMarch 23rd, 2010

Credit Freeze

Financial Market Sclerosis that developed into Credit Infarction

Plunged the Economy Deep into Recession

Quadruple Policy Bypass Averted a Worse Fate Interest Rate Cuts/ Quantitative Stimulus Stimulus Package I T.A.R.P. Stimulus Package II

Rehabilitation / Ugly scar

U.S. Forecast U.S. has endured a Severe Recession

The “Great Recession” is now over So why doesn’t it feel like it?

The credit freeze necessitated the quadruple policy bypass Recovery and rehabilitation underway

Ugly “scar” on prominent display and slow to fade Labor market will take a long time to recover

U.S. Forecast

What will be the shape of the recession and recovery?

Alphabet soup:

U-shaped, V-shaped, L-shaped or maybe W-shaped

Sports equipment:

Hockey stick

U.S. Economic Outlook 4th Quarter 2009 Forecast

U.S. Economic Outlook IEC 1st Quarter 2010 Forecast

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

Gross Domestic Product

% Chg, Annual Rate2.2 5.9* 2.6 2.1 2.2 2.5

Consumer Price Index% Chg, Annual Rate 3.6 3.4 2.1 -0.2 1.5 1.4

Consumer Sentiment 68.4 70.2 72.1 73.2 72.2 72.4

Total Consumption% Chg, Annual Rate 2.8 1.2 2.4 2.4 3.0 2.7

1312111009080706050403020100999897

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

1312111009080706050403020100999897

500.0

0.0

-500.0

-1000.0

-1500.0

Federal Budget Surplus(Billions of Dollars)

Federal Budget Surplus

1312111009080706050403020100999897

140.0

135.0

130.0

125.0

120.0

Total Nonfarm Payroll Employment(Millions)

Total Nonfarm Employment

1312111009080706050403020100999897

11.0

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

Civilian Unemployment Rate(%)

Unemployment Rate

Capital Continues to Flow into the U.S.

• Foreign countries have purchased U.S. government bonds at record levels.

• Will this continue as the U.S. runs deficits measured in the trillions of dollars?

• A return to crowding out?

Foreign Ownership of US Treasury BondsBillions of Dollars

Dec. 1984

Dec. 1989

Mar. 1994

Jun. 2005

Jun. 2006

Jun. 2008

Total outstanding

1515 2392 2508 3093 3321 3621

Foreign-owned

333 464 884 1599 1727 2211

Percent foreign-owned

22.0 19.4 35.2 51.7 52.0 61.1

Percent foreignofficial

56.0 52.6 61.7 67.5 70.2 76.2

U.S. Forecast

Greatest risks to U.S. Economy may come from policy

Sky Mall™ Policy

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast

U.S. Forecast Sky Mall™ Policies:

T.A.R.P.

Foreclosure Prevention Act 2008

American Recovery and Reinvestment Act of 2009 (Stimulus act)

Health Care Reform?

A look at the housing data:

January 1994–January 2010

Florida Forecast Residential real estate showing signs of

improvement. Sales up, prices still falling.

Commercial real estate: wave of foreclosures poised to impact the sector

Economic recovery in Q1 2010.

Labor market to remain in a funk

Short-run demographics hinder recovery

Long run population growth rates lower

1311090705030199979593918987858381797775737169

6.00

5.00

4.00

3.00

2.00

1.00

0.00

-1.00

Population Growth in Florida and Recessions

Shaded Bars = National Recessions

Population % change year ago

13121110090807060504030201009998

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

Florida Real Gross State Product(% change year ago)

13121110090807060504030201009998

300.0

250.0

200.0

150.0

100.0

50.0

0.0

8.5%

8.0%

7.5%

7.0%

6.5%

6.0%

5.5%

5.0%

4.5%

Florida Housing Starts(thousands)

Total Private Housing Starts30 year Mortgage Rates

13121110090807060504030201009998

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

13121110090807060504030201009998

8500.0

8000.0

7500.0

7000.0

6500.0

6000.0

Florida Employment(Thousands)

Wage & Salary Employment

13121110090807060504030201009998

700.0

650.0

600.0

550.0

500.0

450.0

400.0

350.0

Florida Construction Employment(Thousands)

13121110090807060504030201009998

1400.0

1300.0

1200.0

1100.0

1000.0

900.0

800.0

700.0

Florida Professional & Business Services Employment

(Thousands)

13121110090807060504030201009998

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)

RegionPopulation Growth

Average % Chg Rank

Florida 0.9 ---

Deltona 0.2 10

Gainesville 0.8 6

Jacksonville 1.0 4

Lakeland 1.6 2

Miami 0.6 7

Naples 1.0 4

Ocala 2.3 1

Orlando 1.4 3

Palm Bay 0.5 8

Pensacola 0.4 9

Tallahassee 0.8 6

Tampa 0.9 5

2010-2013 Averages;Q4 2009 Forecast

RegionEmployment Growth

Average % Chg Rank

Florida 1.6 ---Deltona 1.1 6

Gainesville 0.6 8Jacksonville 1.6 2

Lakeland 1.0 7Miami 1.3 4Naples 1.2 5Ocala 1.5 3

Orlando 2.1 1Palm Bay 1.1 6Pensacola 0.6 8

Tallahassee 0.5 9Tampa 1.6 2

2010-2013 Averages;Q4 2009 Forecast

Post-recession Outlook for Florida and

Jacksonville in 2010

Sean M. SnaithSean M. Snaith, Ph.D.

Director Institute for Economic Director Institute for Economic CompetitivenessCompetitiveness

[email protected]@SeanSnaith.com

WWW.IEC.UCF.EDUWWW.IEC.UCF.EDU

www.facebook.com/seansnaith www.facebook.com/seansnaith

Twitter: @seansnaithTwitter: @seansnaith

Thank you