Clear Sky Ahead? Presentation by Dr. Paul Mason, University of North Florida

Clear Sky Ahead?

Presentation by Dr. Paul Mason, University of North Florida

Professor of Economics

8 March 2012

The Good

Population relocation to Florida
3rd highest nationally
Fewer retirees (who are now heading to the Carolinas)
Increasingly younger population. Current population is aging less than national average

Real GDP Growth
National Q4 2011 was 3%. For the year it was 1.7%
2012 GDP projected to be -1 to 3%
Expect accommodating Fed policy; legislative inaction; and mediocre growth
5-6% annual growth necessary to reduce unemployment significantly

Inflation
Energy, drought, and raw materials spiked inflation to 4-5% prior to October 2011; fell off since
Official national inflation = 3%; local level inflation is 2.4%
Low inflation is acceptable but signifies economic weakness
Not much inflation since 2007
Growing economy accelerates inflation

Unemployment
Currently 8.3% which is a major improvement over 10%
13.7 million unemployed
58% unemployed are men
25% unemployed are teens
Average unemployment duration is 40 weeks
13.6% of unemployment is tied to construction industries

The Bad

Oil Prices
Lowest price was $32 bbl back in February 2009; Highest was $146 bbl July 2008
Currently at $106 bbl
2009 average price of gas was $1.61; May 2011 it was $3.90
Jacksonville area gasoline price is higher than the national average

Interest Rates
Must go up to incentivize lenders to redeploy cash to borrowers
Fed is not inclined to increase interest rates until 2014

Housing
Housing numbers up nationwide but not in Jacksonville
Local prices continue to fall; demand is not there; too much pent up supply
Most new permits are for multifamily homes
Renting is the new normal

State and Local Government Finances
Revenues down across the board; contributes to less infusion back into GDP

The Ugly

Healthcare
Will be dealing with an aging population for the next 30 years
Cannot solve the debt problem without solving the healthcare problem

Eurozone Debt
Solutions are not simple
Public sector cannot lead prosperity; it must come from the private sector

Federal Debt
$6 in debt for every $1 in GDP
2004-2008 debt was $2.2 trillion but with $2.7 GDP growth
Expansionary fiscal policy must originate from the private sector
Private sector needs to drive prosperity

Global Uncertainty
Businesses are unable to plan; private sector needs certainty

“People who work for a living are outnumbered by people who vote for a living.”