Emerald Coast Association of Realtors/
Building Industry Association of Okaloosa/Walton
Economic and Housing Forecast
Rick Harper, Ph.D.
UWF Office of Economic Development and Engagement
January 20, 2016
210%
2000M01
2000M07
2001M01
2001M07
2002M01
2002M07
2003M01
2003M07
2004M01
2004M07
2005M01
2005M07
2006M01
2006M07
2007M01
2007M07
2008M01
2008M07
2009M01
2009M07
2010M01
2010M07
2011M01
2011M07
2012M01
2012M07
2013m01
2013m07
2014m01
2014m07
2015M01
2015M07
230%
Retail Sales, January 1990 - October 201, Jan 2000 = 100%
Florida
National
Ft. Walton
190%
170%
150%
130%
110%
90%
70%
50%
The 21st century jobs market:
“It’s a great time to own a productive capital asset,
not such a good time to sell your labor for wages,
particularly if you do things that industrial robots or
software could do.”
2012-09-01
2012-01-01
2011-05-01
2010-09-01
2010-01-01
2009-05-01
2008-09-01
2008-01-01
2007-05-01
2006-09-01
2006-01-01
2005-05-01
2004-09-01
2004-01-01
2003-05-01
2002-09-01
2002-01-01
2001-05-01
2000-09-01
2000-01-01
1999-05-01
1998-09-01
1998-01-01
1997-05-01
10%
1996-09-01
1996-01-01
1995-05-01
1994-09-01
1994-01-01
1993-05-01
1992-09-01
1992-01-01
1991-05-01
1990-09-01
1990-01-01
Share of Total Florida Employment
18%
12%
sector share of FL jobs
US sector share
thousands of FL jobs
300
8%
6%
200
4%
100
2%
0%
0
Thousands of Jobs
Florida Manufacturing Employment, Jan 1990 - Dec 2012, s.a.
600
16%
500
14%
400
U.S. Manufacturing Output and Employment, Q1/87 - Q4/12, 1987 = 100%
180%
160%
140%
Employment as % of 1987
Output as % of 1987
120%
100%
80%
60%
Source: Federal Reserve Bank of St. Louis (FRED database)
Sep-12
Oct-11
Nov-10
Dec-09
Jan-09
Feb-08
Mar-07
Apr-06
May-05
Jun-04
Jul-03
Aug-02
Sep-01
Oct-00
Nov-99
Dec-98
Jan-98
Feb-97
Mar-96
Apr-95
May-94
Jun-93
Jul-92
Aug-91
Sep-90
Oct-89
Nov-88
Dec-87
Jan-87
40%
Sep-12
Jan-12
May-11
Sep-10
Jan-10
May-09
Sep-08
Jan-08
May-07
Sep-06
Jan-06
May-05
Sep-04
Jan-04
May-03
Sep-02
Jan-02
May-01
Sep-00
Jan-00
May-99
Sep-98
Jan-98
May-97
Sep-96
Jan-96
May-95
Sep-94
Jan-94
May-93
Sep-92
Jan-92
May-91
Sep-90
Jan-90
Output per Hour in Manufacturing and in All Businesses, 1/90 = 100%
250
200
150
100
Output per hour in Manufacturing
Output per hour in All Businesses
50
0
U.S. Nonfarm Employment: Total (ex mfg) and Manufacturing, 1939 - 2012
140000
120000
thousands of jobs
100000
US Total Nonfarm Employment (ex mfg)
US Manufacturing Nonfarm Employment
80000
60000
40000
20000
Source: FRED Federal Reserve
2011
2008
2005
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1963
1960
1957
1954
1951
1948
1945
1942
1939
0
Job polarization: the disappearance of employment in
occupations in the middle of the skill distribution
Characteristics:
– since the 1980s
– Job polarization is not a gradual process; mostly occurring
during economic downturns
– Jobless recoveries are associated with the disappearance
of middle-skill occupations (most of which involve
performing routine tasks)
– Technology is biased against routine tasks
Based on research by Nir Jamiovich and Henry Siu (2012), Goldin and Katz, Acemoglu
and Autor, presentation by Mike Chriszt of the Atlanta Federal Reserve Bank.
Consider 4 types of jobs:
• Non-routine cognitive: management, finance, legal, science,
engineering, healthcare practitioner
– tend to be high-skill occupations
• Non-routine manual: healthcare support, food prep, janitorial, etc.
– tend to be low-skill occupations
• Routine cognitive: sales-related, office and admin support
– tend to be middle-skill occupations
• Routine manual: production, material moving, construction
– tend to be middle-skill occupations
As presented by Mike Chriszt, Atlanta FRB, from Jamiovich and Siu 2012
From Chriszt, and Jamiovich and Siu
Outcomes per $10mm in Sales, by Industry
350
300
250
Restaurant Sales
Nursing Home Industry Sales
200
Pharmaceutical Manufacturing Sales
Lawn & Garden Equipment Manufacturing Sales
150
Motion Pictures & Digital Media Sales
100
50
0
Direct Jobs
Indirect Jobs
Induced Jobs
Source: IMPLAN Software and Data (MIG Group)
Average
Compensation per
Emplyee ($000)
Value Added per
Employee ($000)
Output per Employee
($000)
Outcomes per 100 Direct Jobs, by Industry
350
Restaurant/Food Service: Sales = $6.1 M
Nursing Homes: Sales = $5.1 M
Pharmaceutical Manufacturing: Sales = $128.2 M
Lawn & Garden Equipment Manufacturing: Sales = $42.2 M
Motion Pictures & Digital Media: Sales = $17.1 M
300
250
200
150
100
50
0
Indirect Jobs
Induced Jobs
Average
Compensation per
Employee ($000)
Value Added per
Employee ($000)
Output per Employee
($000)
Will these changes become larger or
smaller over the coming decades?
• The pace of technology growth is accelerating.
• The cost of shipping has fallen.
• Technology is biased against routine tasks, whether they
involve cognitive skills or not.
• The cost to businesses of using labor is rising, especially with
respect to nonwage costs (healthcare, other fringes).
• Businesses are increasingly able to hire specialty talent, giving
rise to the “gig,” or the “free agent” economy.
• There is increasing divergence in the income distribution in
the developed economies.
Education vs. Income for all Counties in the U.S., 2012 data
annual per capita personal income by county of residence
$140,000
$120,000
New
York
Williams, ND
Sully, SD
$100,000
y = 637.8x + 25601
R² = 0.3112
Alexandria
$80,000
Arlington
McMullen, TX
Los Alamos
$60,000
$40,000
$20,000
$0
0
10
20
30
40
50
60
70
percent of resident population (aged 25+) with bachelor's degree or higher
80
Education vs. Income for Counties in Florida, 2012 data
annual per capita personal income by county of residence
$70,000
$60,000
Collier
y = 856.31x + 17481
R² = 0.6661
$50,000
Okaloosa
$40,000
Leon
Alachua
$30,000
$20,000
$10,000
$0
0
5
10
15
20
25
30
35
40
45
percent of resident population (aged 25+) with bachelors degree or higher
50
What’s the Bottom Line?
• Economic activity results from matching area resources
(supply) with needs in the marketplace (demand).
• Improving the quality of local assets (labor, capital, natural
resources, intellectual property, entrepreneurial ability) allows
assets to earn a higher return in the marketplace.
• The high-wage, sustainable jobs of tomorrow will go to those
with the skills to create and use new technologies. Routine,
non-cognitive tasks will either be automated or off-shored.
• Safe streets and good schools are essential to healthy growth.
• Small and new businesses have been the net job generators,
but that role has been changing over time.
Economic Drivers
• Job market recovery continues (Hollowing out of middle class)
• Low to moderate economic growth (demand deficit)
• Housing market recovers (Need formation of new households)
• Monetary policy (unwinding years of money supply growth)
• Fiscal policy (“Stim-sterity” needed, calm before the storm)
• Dollar / inflation ($ up, inflation expectations anchored)
• World growth weaker than US (Grexit, Brexit, China, BRICs)
National Outlook 2016:
•Economic activity well above pre-recession levels
•Unemployment decline slows, 5+% range represents full employment
•Economic growth trajectory suffering from modest consumer income growth
•Housing purchase prices recovering
•Residential real estate market recovery in full swing; mortgage rates rise.
•10 year Treasury yield at historic low, Fed will stop buying MBS
•Large banks prosper, community banks slowly improve
•Elections coming up; no meaningful fiscal (or any) policy
•Budget crisis abated; baby boomer retirements loom
•Health care cost trajectory improved but not yet sustainable
Emerald Coast Association of Realtors/
Building Industry Association of Okaloosa/Walton
Economic and Housing Forecast
Questions?
Rick Harper, Ph.D.
UWF Office of Economic Development and Engagement
January 20, 2016