The 2015 Economy:Staying the course??

R. Christopher Jones, Ph.D.

2

What has 2014 offered us (the U.S.)?

An economy that is still growing, but a bit more slowly.. Recession technically over June 2009

18 out of 21 quarters with positive real GDP growth since Q3 2009

We did see negative growth in Q1 2014 (2.1%) Unemployment at lowest point since July 2008 (5.9%) Retail sales growth relatively solid Growth in industrial production and capacity utilization Interest rates still low, and we have avoided inflation 5.2% growth in S&P 500 YTD 2014

3

What else did it bring?

Slightly better job creation.. We created 1.3 million jobs so far in 2014

About 200,000 more than in all of 2013

Increasing Federal debt continues to raise concerns of inflation (although we haven’t seen it yet), while Fed plans to normalize monetary policy (Fed Funds Rate incr.)

International debt (nearly $160 T) still poses a threat to monetary and economic stability

Marginal growth in housing starts

4

What about Florida?

Growth has returned, but not “2000’s style” growth YTD net job growth – 122,300 Unemployment at 6.1% (Sept.) Housing starts have slipped slightly since 2013

(57,691 YTD) Home values beginning to move upward All major regional markets seem to have

awakened from the economic coma, but are far from robust

5

U.S. Real GDP 1952-2014 (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$17,000

Q2

52

Q2

54

Q2

56

Q2

58

Q2

60

Q2

62

Q2

64

Q2

66

Q2

68

Q2

70

Q2

72

Q2

74

Q2

76

Q2

78

Q2

80

Q2

82

Q2

84

Q2

86

Q2

88

Q2

90

Q2

92

Q2

94

Q2

96

Q2

98

Q2

00

Q2

02

Q2

04

Q2

06

Q2

08

Q2

10

Q2

12

Q2

14

Bill

ion

s

6

U.S. Real GDP Annualized % Growth

1952-2014

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%Q

2 52

Q2

54

Q2

56

Q2

58

Q2

60

Q2

62

Q2

64

Q2

66

Q2

68

Q2

70

Q2

72

Q2

74

Q2

76

Q2

78

Q2

80

Q2

82

Q2

84

Q2

86

Q2

88

Q2

90

Q2

92

Q2

94

Q2

96

Q2

98

Q2

00

Q2

02

Q2

04

Q2

06

Q2

08

Q2

10

Q2

12

Q2

14

7

U.S. Unemployment Rate 1960-2014

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) 1960-2014

400600800

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

000'

s

9

Real Retail & Food Svcs. Sales 1992-2014

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

Bil

lio

ns

10

Inflation (CPI-U) 1970-2014

30.0

70.0

110.0

150.0

190.0

230.0

11

Real Per Capita Disposable Personal Income 1960-2014

$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$40,000

Ap

r-60

Ap

r-62

Ap

r-64

Ap

r-66

Ap

r-68

Ap

r-70

Ap

r-72

Ap

r-74

Ap

r-76

Ap

r-78

Ap

r-80

Ap

r-82

Ap

r-84

Ap

r-86

Ap

r-88

Ap

r-90

Ap

r-92

Ap

r-94

Ap

r-96

Ap

r-98

Ap

r-00

Ap

r-02

Ap

r-04

Ap

r-06

Ap

r-08

Ap

r-10

Ap

r-12

Ap

r-14

12

Credit Market Debt Per Capita 1960-2014 (infl. adj.)

$5,000

$10,000$15,000

$20,000$25,000

$30,000

$35,000$40,000

$45,000$50,000

$55,000

13

Consumer Sentiment 1980-2014

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

120.0

14

Federal Debt 1972-2014

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

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

Bil

lio

ns

Domestic Foreign

15

2015 U.S. Forecast Growth continues, real GDP will grow by 2.5%

- 3.0% Modest job growth continues, unemployment

finishes out the year around 5.7% - 5.8% Stock markets grow by 5% - 8% 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 729,900 jobs since July 2010 Represents 10.3 percent of all U.S. jobs created during

this period The net job gains (729.9k) represent 78.4% of the job

losses experienced during the recession (930,800) Oct. 2013 – Sept. 2014: Gained 129,800 jobs 6.2% unemployment (Sept. 2014) 57,691 housing starts first 8 mos. of 2014, compared to

60,319 in 2013 and 40,101 in 2012 Home prices have increased by 9.8 percent in the past

year

1717

Florida Real GDP(millions of chained 2005 dollars)1997-2013

$500,000$550,000$600,000$650,000$700,000$750,000$800,000$850,000

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

1818

Florida Employment (000s)1990-2014

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

Sep

-90

Sep

-91

Sep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

1919

Florida Unemployment Rate 1983-2014

2.03.04.05.06.07.08.09.0

10.011.012.0

Sep

-83

Sep

-84

Sep

-85

Sep

-86

Sep

-87

Sep

-88

Sep

-89

Sep

-90

Sep

-91

Sep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

Sep

-10

Sep

-11

Sep

-12

Sep

-13

Sep

-14

%

2020

Florida Housing Starts1988-2014

02,0004,0006,0008,000

10,00012,00014,00016,00018,00020,00022,00024,00026,00028,000

Au

g-88

Au

g-89

Au

g-90

Au

g-91

Au

g-92

Au

g-93

Au

g-94

Au

g-95

Au

g-96

Au

g-97

Au

g-98

Au

g-99

Au

g-00

Au

g-01

Au

g-02

Au

g-03

Au

g-04

Au

g-05

Au

g-06

Au

g-07

Au

g-08

Au

g-09

Au

g-10

Au

g-11

Au

g-12

Au

g-13

Au

g-14

2121

Florida Home Price Index (Q1 1980 = 100)1988-2014

100150200250300350400450500

Ap

r-88

Ap

r-89

Ap

r-90

Ap

r-91

Ap

r-92

Ap

r-93

Ap

r-94

Ap

r-95

Ap

r-96

Ap

r-97

Ap

r-98

Ap

r-99

Ap

r-00

Ap

r-01

Ap

r-02

Ap

r-03

Ap

r-04

Ap

r-05

Ap

r-06

Ap

r-07

Ap

r-08

Ap

r-09

Ap

r-10

Ap

r-11

Ap

r-12

Ap

r-13

Ap

r-14

2222

Florida Home Ownership Rate1984-2013

63

65

67

69

71

73

Jan-

84Ja

n-85

Jan-

86Ja

n-87

Jan-

88Ja

n-89

Jan-

90Ja

n-91

Jan-

92Ja

n-93

Jan-

94Ja

n-95

Jan-

96Ja

n-97

Jan-

98Ja

n-99

Jan-

00Ja

n-01

Jan-

02Ja

n-03

Jan-

04Ja

n-05

Jan-

06Ja

n-07

Jan-

08Ja

n-09

Jan-

10Ja

n-11

Jan-

12Ja

n-13

%

2323

Leading Index for Florida1990-2014

-5-4-3-2-1012345

%

2424

FL Employment By Region 1990-2014 (000s)

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

Miami

Orlando

Tampa

J ax

2525

FL Unemployment Rate by Region1990-2014

2.03.04.05.06.07.08.09.010.011.012.013.0

Miami

Orlando

Tampa

J ax

2626

FL Housing Starts By Region1990-2014

0400800

1,2001,6002,0002,4002,8003,2003,6004,0004,4004,8005,2005,600

Miami

Orlando

Tampa

J ax

27

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)