An Economic Forecast in Uncertain Times
Orlando, FL
May 22nd, 2014
U.S. Forecast
 Policy Uncertainty Still Hangs Over
the Economy
 Health Care Reform
 Impact on labor market
 Delayed mandates
 Dodd-Frank Financial Regulatory Reform
 Impact on credit flows & financial sector
 45.7% (128)
 Fiscal “Cliff”
 Sequester, shutdown/debt ceiling…
 Monetary Policy
U.S. Forecast
 The economic impact of economic
policy uncertainty
Statistical analysis shows that higher policy
uncertainty causes:
1. Lower private investment
2. Lower industrial production
3. Much lower employment
Economic Policy Uncertainty Index
U.S. Forecast
U.S. Forecast
U.S. Forecast
U.S. Forecast
Civilian Unemployment Rate
(%)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Unemployment Rate
U.S. Forecast
U.S. Forecast
U.S. Forecast
Private Fixed Nonresidential Investment
(Billions of Dollars)
2800.0
2600.0
2400.0
2200.0
2000.0
1800.0
1600.0
1400.0
1200.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Private Fixed Nonresidential Investment
U.S. Forecast
Real Investment Equipment & Software
(Billions of Dollars)
1300.0
1200.0
1100.0
1000.0
900.0
800.0
700.0
600.0
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Real nonresidential investment-equipment & software
U.S. Forecast
 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
Sky Mall™ Policies:
T.A.R.P.
Foreclosure Prevention Act 2008
ARRA of 2009
Shovel ready projects
Making work pay tax breaks
Affordable Care Act
Dodd-Frank
HIRE Act 2010
U.S. Forecast
 Lost housing wealth
 Weak labor market recovery
 Both have weighed on consumers
 “Mini age of austerity”
U.S. Household Wealth
(Trillions of $)
2005
2006
2007
2008
2009
Q1*
Total Assets
71.3
78.6
79.5
66.6
62.8
94.4
Financial
Assets
42.9
49.0
51.4
42.2
39.6
66.9
Home Equity
13.2
12.8
10.3
7.0
6.1
10.0
Net Worth
59.1
65.1
65.1
52.4
48.7
80.6
2013 Q4
U.S. Economic Outlook
2013
Q3
2013
Q4
2014
Q1
GDP
% Change, Annual Rate
4.1
2.6
-0.8
2.4
2.6
2.9
Consumer Price Index
% Change, Annual Rate
2.2
1.1
1.8
1.5
1.4
1.7
Consumer Sentiment
Consumption
% Change, Annual Rate
2014
2015
2016
81.6 76.9 80.9 80.9 81.4 82.5
2.0
3.3
2.7
2.3
2.6
2.9
U.S. Forecast
 Monetary Policy
 The job of the Federal Reserve is to
take away the punch bowl just as
the party gets going
William McChesney Martin
Former Fed Chairman
Florida Housing Market
Housing market recovery
continues to unfold
Double-digit price appreciation
High level of investor activity
Housing finance still problematic
Will momentum be maintained?
Florida Housing Market
Florida Housing Market
Florida Housing Market
February
2014
February
2013
Closed Sales
15,826
15,591
1.5%
Median Sale
Price
$165,000
$150,000
10.0%
Median Days
on Market
61
62
-1.6%
5.7
5.5
2.1%
Inventory
(Months Supply)
Percent
change
Florida Housing Market
Investors are still active in
Florida residential real estate
Evidenced by high share of cash
transactions
Private equity & hedge funds
Is this a good thing or a bad
thing?
Housing Market
Cash Sales
February
2014
February
2013
Cash as % of
February
2014 Sales
Florida
7,596
7,928
48.0%
Miami
1,429
1,380
49.2%
Tampa
1,122
1,243
47.4%
Jacksonville
507
290
44.2%
695
847
41.4%
Orlando
Housing Market
Housing Finance
Unsustainably high share of cash
transactions
Mortgage availability has been
restricted by
Dodd Frank
Capital Standards
Underwriting Standards
Limited Private Securitization
Demise of Mortgage Brokering
Shell shock
Florida Forecast
Florida Housing Starts
(thousands)
300.0
9%
250.0
8%
200.0
7%
150.0
6%
100.0
5%
50.0
4%
0.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Total Private Housing Starts
30 year Mortgage Rates
3%
Florida Forecast
Florida Population
(Thousands)
21000.0
20000.0
19000.0
18000.0
17000.0
16000.0
15000.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Florida Forecast
Florida & U.S. Unemployment Rate
(%)
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
FL Unemployment Rate
U.S. Unemployment Rate
Florida Forecast
Florida Real Gross State Product
(% change year ago)
10%
5%
0%
-5%
-10%
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Florida Forecast
Florida Employment
(Thousands)
8400.0
8200.0
8000.0
7800.0
7600.0
7400.0
7200.0
7000.0
6800.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Wage & Salary Employment
Florida Professional & Business
Services Employment
(Thousands)
1300.0
1200.0
1100.0
1000.0
900.0
800.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Florida Forecast
Florida Professional & Business
Services Employment
(Thousands)
1400.0
1300.0
1200.0
1100.0
1000.0
900.0
800.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Florida Forecast
Florida Construction Employment
(Thousands)
700.0
600.0
500.0
400.0
300.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Florida Forecast
Florida Leisure & Hospitality
Employment
(Thousands)
1150.0
1100.0
1050.0
1000.0
950.0
900.0
850.0
800.0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
2014-2017 Averages;
Q1 2014 Forecast
Florida
Sector
% Average Annual
Growth
Construction
8.7
Professional & Business Services
4.3
Trade, Transportation & Utilities
4.0
Education-Health Services
2.3
Leisure & Hospitality
Information
Manufacturing
Financial
State & Local Government
Federal Government
1.9
1.8
1.3
0.8
0.6
-1.0
2014-2017 Averages;
Q4 2013 Forecast
Region
Population Growth
Average % Chg
Rank
Florida
1.4
---
Deltona
1.1
8
Gainesville
0.4
12
Jacksonville
1.4
4
Lakeland
0.9
10
Miami
1.2
5
Naples
2.5
1
Ocala
1.7
3
Orlando
2.0
2
Palm Bay
0.9
11
Pensacola
0.9
9
Tallahassee
1.1
7
Tampa
1.2
6
2014-2017 Averages;
Q4 2013 Forecast
Region
Employment Growth
Average % Chg
Rank
Florida
2.4
---
Deltona
1.8
11
Gainesville
1.5
12
Jacksonville
2.2
6
Lakeland
1.9
9
Miami
2.3
4
Naples
4.3
1
Ocala
2.6
3
Orlando
3.0
2
Palm Bay
2.0
7
Pensacola
1.9
8
Tallahassee
1.9
10
Tampa
2.3
5
Thank you
Sean M. Snaith, Ph.D.
Director
Institute for Economic Competitiveness
(407) 823-1453
Sean@SeanSnaith.com
WWW.IEC.UCF.EDU
www.facebook.com/seansnaith
Twitter: @seansnaith