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About


The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


July 7, 2014

To Buy or Not to Buy, That Is the Question (for Millennials)

In the last month, the South Florida Business Journal reported on the announcement of at least three new apartment projects:

  • June 18: Developers plan 300 apartments in Midtown Miami
  • June 19: Lennar plans 229 apartments in Boca Raton after $7.5M purchase
  • June 23: Broward commissioners to vote on 400-apartment project

Data from the real estate analytics firm REIS indicate that 2,425 new apartment units were completed in Miami in 2013. Not only is this noteworthy because this represents the most units delivered per year since 1991 but also because nearly all of the units were absorbed. More than 600 units have been delivered so far in 2014, and close to 3,000 units remain under construction. Despite this comeback in Miami apartment construction, the apartment vacancy rate ended the first quarter at 3.8 percent and is expected to remain at this low level for an extended period. Is apartment construction heating up in South Florida as a result of a change in fundamental beliefs of the rising generation?

According to an article featured in the latest issue of the Atlanta Fed's EconSouth, the generation known as the millennials is showing signs of veering from established patterns, particularly when it comes to milestones like moving out of the parents' house, getting married, and buying a home. Many experts, including Atlanta Fed economist Tim Dunne (who has written extensively on the topic, including this article), acknowledge that economic conditions are partly to blame for these delayed decisions.

But are these decisions only being delayed, or have preferences changed? Reports from some Atlanta Fed business contacts suggest that attitudes and preferences may in fact be changing. Some business contacts report that, unlike previous generations, millennial employees are often unwilling to commit long term to one organization, preferring instead nonmonetary perks such as flex time over higher pay, and they place great value on work-life balance. Moreover, real estate business contacts in South Florida have noted that millennials prefer the "experience" that often comes with high-end apartments, such as amenities including dining and shopping, rather than a traditional home in a suburban setting.

More than shifting preferences may be at work, though. According to Fannie Mae’s national housing survey, conducted in May 2014, potential first-time homebuyers are facing several challenges that inhibit their ability to purchase a home. Although the survey does confirm that the number of renters has increased on a national basis, and the number of homeowners has declined, since the financial crisis, the survey's findings indicate that potential homebuyers are not renting by choice but rather by necessity. Higher credit standards and increasing home prices have hindered potential homebuyers. The survey results suggest that younger renters aspire to own but feel pessimistic about their ability to get a mortgage, perceiving down payment and credit score requirements as obstacles. The survey also reported that young renters aspire to own for financial and lifestyle reasons, although a smaller share of respondents (versus last year) reported that their primary reason for renting is to prepare them for homeownership.

For the rental market, the question remains whether that segment's growth is a permanent shift by millennials or merely a bridge until this generation is better prepared to become homeowners.

By Marycela Diaz-Unzalu, a Regional Economic Information Network analyst in the Atlanta Fed's Miami Branch

June 26, 2014

Florida, On Holiday

In May, the Sixth District states added just 15,000 net new payrolls. This increase follows three months where the states hit the mark of 40,000 new payrolls per month. However, last month, the District's labor market held two dubious distinctions: first, Florida shed more payrolls than any other state in the nation, and second, Georgia—despite adding 12,900 payrolls in May—had the largest statistically significant increase in its unemployment rate than any other state in the nation (up 0.3 percentage points; see the chart).

Contributions to Change in Net Payrolls, by Sixth District State

As you can see in the chart above, Florida added about 100,000 payrolls for the first four months of 2014 before hitting a snag in May. So what happened last month? Three of the state's sectors that appeared to have turned the corner following the downturn actually were hit hard in May: employment in the construction and accommodation and food services sectors both declined last month, losing 6,100 and 7,700 payrolls, respectively. Hiring in professional and business services—a sector recovering faster than most in the postrecession period—shed 9,500 payrolls. Florida's professional and business services sector added 25,500 payrolls during the first four months of 2014.

As always, a reasonable word of caution when looking at these data: one month does not a trend make. Still, you can't help but scratch your head on this one, especially with accommodation and food services, as the weather warms up after a harsh winter and people begin planning their Florida beach getaways. You can see how employment in the previously mentioned sectors is faring relative to their most recent peaks and troughs in the chart below.

Florida Total Nonfarm Payrolls and Selected Industries

On the other hand, Florida's labor market is still showing some signs of life: the trade and transportation sector added 5,300 payrolls, and retailers added 2,100 payroll jobs.

Other District states fared better in May. As previously mentioned, Georgia added 12,900 payrolls (with 5,400 of those being in professional, scientific, and technical services), and Louisiana added 8,500 payroll jobs over the month. Tennessee added 6,700 payrolls, and Mississippi—where monthly payroll growth has averaged 1,300 during the past 12 months—added 4,100 payrolls.

State unemployment rates
Despite five out of six District states adding payrolls in May, five out of six District states also saw increases in their unemployment rates. The District's aggregate unemployment rate ticked up 0.1 percentage point to reach 6.5 percent, while Mississippi's ticked up to reach 7.7 percent (the highest rate in the District). Georgia saw a 0.3 percentage point increase, reaching 7.2 percent. Louisiana's noticeably lower rate of employment increased to 4.9 percent (see the chart).

Unemployment Rates for Sixth District States, and Sixth District Aggregate

To find out how many jobs it would take to lower unemployment rates in all 50 states, check out the Atlanta Fed's Jobs Calculator.

The next national employment release will be out July 3, and the next regional employment release comes out July 18.

By Mark Carter, a senior economic analyst in the Atlanta Fed's research department

May 9, 2014

Is Florida Finally Beginning to Flourish Again?

In March, we shared the view of our contacts in the Regional Economic Information Network (REIN) in north and central Florida. Those contacts described modest but sustained growth in activity in the first quarter of the year. That sentiment continued as winter turned into spring, with reports of increasing activity and greater optimism for continued growth during the remainder of the year.

Since mid-March, the REIN team in the Atlanta Fed’s Jacksonville Branch held 13 one-on-one interviews, one roundtable with a mix of business leaders, a Trade and Transportation Advisory Council meeting (recently summarized), as well as our branch board meeting. Although meeting participants noted acquisitions as a primary growth engine for most firms, some firms are expanding capacity to meet improving demand. Community banks are reporting increased commercial activity as bigger banks trim lines on small businesses. Though loan demand is still relatively soft, our contacts characterized clients as somewhat more confident, which bodes well for future lending activity. One banker cited noteworthy increases in credit card usage and home equity loans.

Retail contacts continue to express concerns about low-income consumers but note that the slowly improving labor market is resulting in somewhat more spending. In central Florida, contacts noted strong spending by more affluent consumers, including foreign visitors who are seeking high-end retail and dining. Robust home sales and price appreciation, accompanied by declining lender-mediated sales, were widely reported. Commercial construction is on the rise, especially in sectors such as health care, manufacturing, apartments, and higher education.

A focus on cost-cutting along with productivity-enhancing efforts continues. As one chief executive officer put it, “People are the last thing we’ll invest in.” Another company has committed to keeping its general and administrative expenses flat, which will result in support staff cuts to offset the increased cost of technology investments and health care. Two other large contacts noted significant reductions of full-timers to avoid having to provide health care coverage and to “be more in line with the industry.” We increasingly hear more about firms restructuring employee health plans and benefits to reduce costs to the company, including shifting more cost burden to the employee, restricting eligibility for spouses who may have access to insurance elsewhere, and adding risk-based surcharges.

Education contacts noted that the ability to place graduates seeking work has improved. Stories abound regarding difficult-to-fill positions (truck drivers, IT, accounting, etc.), and reports of a willingness to increase starting salaries are mixed. Generally, there were few reports of wage pressures mounting (outside of the trucking industry). The news on input prices remains relatively quiet.

Our contacts noted that qualified mortgage rules—and regulations more generally—have the potential to affect the housing recovery. A mortgage and refinance company has cut the majority of its workforce as refinance volume diminishes but noted that current regulations are making first mortgages, especially to the self-employed, “nearly impossible” to issue. Two other small-banking contacts indicated they have discontinued providing residential mortgages. However, two residential real estate contacts did not indicate any major concern about clients’ abilities to obtain mortgage loans.

At the April meeting of the board of directors of the Jacksonville Branch, we asked board members whether the current and near-term environment reflects an economy that is growing at a 2 percent rate or one that is growing at 3 percent. The majority view activity now and in the coming year to be more closely aligned with a 3 percent growth rate. The board members feel that the biggest potential impediment to growth is related to the consumer, as many people continue to struggle and consumer confidence remains lower than before the recession (see the chart).

Florida Consumer Confidence

The old proverb goes, “No matter how long the winter, spring is sure to follow.” One could apply this adage to the Great Recession and the long recovery and ask: Has an economic “spring” finally sprung? We’ll be keeping tabs as the year plays out.

By Sarah Arteaga, a Regional Economic Information Network director in the Atlanta Fed's Jacksonville Branch


April 29, 2014

Is the Southeast Poised for Tourism Growth?

The Atlanta Fed's Travel and Tourism Advisory Council met at the Miami Branch for the first time this year on April 17. Overall, council members were enthusiastic about economic activity, and its benefits for the tourism sector, in the Southeast.

Georgia and Alabama bounced back from harsh weather conditions in January and February. The outlook for the next three months is positive, with contacts reporting a strong number of bookings and ticket sales. Florida's tourism benefited from the winter weather with travelers seeking warm weather or extending stays as a result of cancelled flights. Fort Lauderdale, in particular, indicated record numbers in February and March.

The Southeast experienced an increase in international tourist activity in 2013, primarily from Latin America and Europe. Participants noted domestic travelers were travel fatigued and are staying closer to home. Consumer spending increased from a year ago, not only in hotel and food expenditures but in retail stores as well. The increase in spending came primarily from luxury restaurants and hotels.

On the horizon for regional travel and tourism
The council discussed the increase in capital expenditures across the region, reporting heavy construction activity in new hotels, sports venues, and other attractions in addition to renovations of restaurants, hotels, and convention centers.

Technology enhancements continue to significantly affect the industry and are being implemented across many segments of the industry. For example, customers can now complete ticket sales for theme parks, sporting events, and other entertainment events as well as reservations for dinner or special services such as spa treatments prior to traveling. Travelers can electronically handle requests for food orders, hotel check-in, beach chair reservations, and maintenance requests once they have reached their destination. (Don't be surprised to find yourself handed an iPad upon arrival at your hotel to facilitate check-ins and any other needs during your stay.)

Tourism markets expand
Interestingly, the council indicated that families are using children's sporting events—like traveling little leagues—as their family vacation. In response to this growing market, the industry is developing special venues and events for these groups to include family- and sports-oriented activities.

The state of Florida is promoting itself as a destination for medical treatment as a way to expand its customer travel industry. The state is proposing legislation to require VISIT FLORIDA, the State's official marketing corporation, to market Florida as a medical destination. Business contacts in the health care field are also heavily marketing health care in the state to countries with an underdeveloped health care sector.

All that said, the travel and tourism sector looks promising in the near term, and new industry developments should enhance the vacation experience for those about to visit the Southeast.

By Marycela Diaz-Unzalu, an economic and financial education specialist in the Miami Branch of the Atlanta Fed


July 7, 2014

To Buy or Not to Buy, That Is the Question (for Millennials)

In the last month, the South Florida Business Journal reported on the announcement of at least three new apartment projects:

  • June 18: Developers plan 300 apartments in Midtown Miami
  • June 19: Lennar plans 229 apartments in Boca Raton after $7.5M purchase
  • June 23: Broward commissioners to vote on 400-apartment project

Data from the real estate analytics firm REIS indicate that 2,425 new apartment units were completed in Miami in 2013. Not only is this noteworthy because this represents the most units delivered per year since 1991 but also because nearly all of the units were absorbed. More than 600 units have been delivered so far in 2014, and close to 3,000 units remain under construction. Despite this comeback in Miami apartment construction, the apartment vacancy rate ended the first quarter at 3.8 percent and is expected to remain at this low level for an extended period. Is apartment construction heating up in South Florida as a result of a change in fundamental beliefs of the rising generation?

According to an article featured in the latest issue of the Atlanta Fed's EconSouth, the generation known as the millennials is showing signs of veering from established patterns, particularly when it comes to milestones like moving out of the parents' house, getting married, and buying a home. Many experts, including Atlanta Fed economist Tim Dunne (who has written extensively on the topic, including this article), acknowledge that economic conditions are partly to blame for these delayed decisions.

But are these decisions only being delayed, or have preferences changed? Reports from some Atlanta Fed business contacts suggest that attitudes and preferences may in fact be changing. Some business contacts report that, unlike previous generations, millennial employees are often unwilling to commit long term to one organization, preferring instead nonmonetary perks such as flex time over higher pay, and they place great value on work-life balance. Moreover, real estate business contacts in South Florida have noted that millennials prefer the "experience" that often comes with high-end apartments, such as amenities including dining and shopping, rather than a traditional home in a suburban setting.

More than shifting preferences may be at work, though. According to Fannie Mae’s national housing survey, conducted in May 2014, potential first-time homebuyers are facing several challenges that inhibit their ability to purchase a home. Although the survey does confirm that the number of renters has increased on a national basis, and the number of homeowners has declined, since the financial crisis, the survey's findings indicate that potential homebuyers are not renting by choice but rather by necessity. Higher credit standards and increasing home prices have hindered potential homebuyers. The survey results suggest that younger renters aspire to own but feel pessimistic about their ability to get a mortgage, perceiving down payment and credit score requirements as obstacles. The survey also reported that young renters aspire to own for financial and lifestyle reasons, although a smaller share of respondents (versus last year) reported that their primary reason for renting is to prepare them for homeownership.

For the rental market, the question remains whether that segment's growth is a permanent shift by millennials or merely a bridge until this generation is better prepared to become homeowners.

By Marycela Diaz-Unzalu, a Regional Economic Information Network analyst in the Atlanta Fed's Miami Branch

June 26, 2014

Florida, On Holiday

In May, the Sixth District states added just 15,000 net new payrolls. This increase follows three months where the states hit the mark of 40,000 new payrolls per month. However, last month, the District's labor market held two dubious distinctions: first, Florida shed more payrolls than any other state in the nation, and second, Georgia—despite adding 12,900 payrolls in May—had the largest statistically significant increase in its unemployment rate than any other state in the nation (up 0.3 percentage points; see the chart).

Contributions to Change in Net Payrolls, by Sixth District State

As you can see in the chart above, Florida added about 100,000 payrolls for the first four months of 2014 before hitting a snag in May. So what happened last month? Three of the state's sectors that appeared to have turned the corner following the downturn actually were hit hard in May: employment in the construction and accommodation and food services sectors both declined last month, losing 6,100 and 7,700 payrolls, respectively. Hiring in professional and business services—a sector recovering faster than most in the postrecession period—shed 9,500 payrolls. Florida's professional and business services sector added 25,500 payrolls during the first four months of 2014.

As always, a reasonable word of caution when looking at these data: one month does not a trend make. Still, you can't help but scratch your head on this one, especially with accommodation and food services, as the weather warms up after a harsh winter and people begin planning their Florida beach getaways. You can see how employment in the previously mentioned sectors is faring relative to their most recent peaks and troughs in the chart below.

Florida Total Nonfarm Payrolls and Selected Industries

On the other hand, Florida's labor market is still showing some signs of life: the trade and transportation sector added 5,300 payrolls, and retailers added 2,100 payroll jobs.

Other District states fared better in May. As previously mentioned, Georgia added 12,900 payrolls (with 5,400 of those being in professional, scientific, and technical services), and Louisiana added 8,500 payroll jobs over the month. Tennessee added 6,700 payrolls, and Mississippi—where monthly payroll growth has averaged 1,300 during the past 12 months—added 4,100 payrolls.

State unemployment rates
Despite five out of six District states adding payrolls in May, five out of six District states also saw increases in their unemployment rates. The District's aggregate unemployment rate ticked up 0.1 percentage point to reach 6.5 percent, while Mississippi's ticked up to reach 7.7 percent (the highest rate in the District). Georgia saw a 0.3 percentage point increase, reaching 7.2 percent. Louisiana's noticeably lower rate of employment increased to 4.9 percent (see the chart).

Unemployment Rates for Sixth District States, and Sixth District Aggregate

To find out how many jobs it would take to lower unemployment rates in all 50 states, check out the Atlanta Fed's Jobs Calculator.

The next national employment release will be out July 3, and the next regional employment release comes out July 18.

By Mark Carter, a senior economic analyst in the Atlanta Fed's research department

May 9, 2014

Is Florida Finally Beginning to Flourish Again?

In March, we shared the view of our contacts in the Regional Economic Information Network (REIN) in north and central Florida. Those contacts described modest but sustained growth in activity in the first quarter of the year. That sentiment continued as winter turned into spring, with reports of increasing activity and greater optimism for continued growth during the remainder of the year.

Since mid-March, the REIN team in the Atlanta Fed’s Jacksonville Branch held 13 one-on-one interviews, one roundtable with a mix of business leaders, a Trade and Transportation Advisory Council meeting (recently summarized), as well as our branch board meeting. Although meeting participants noted acquisitions as a primary growth engine for most firms, some firms are expanding capacity to meet improving demand. Community banks are reporting increased commercial activity as bigger banks trim lines on small businesses. Though loan demand is still relatively soft, our contacts characterized clients as somewhat more confident, which bodes well for future lending activity. One banker cited noteworthy increases in credit card usage and home equity loans.

Retail contacts continue to express concerns about low-income consumers but note that the slowly improving labor market is resulting in somewhat more spending. In central Florida, contacts noted strong spending by more affluent consumers, including foreign visitors who are seeking high-end retail and dining. Robust home sales and price appreciation, accompanied by declining lender-mediated sales, were widely reported. Commercial construction is on the rise, especially in sectors such as health care, manufacturing, apartments, and higher education.

A focus on cost-cutting along with productivity-enhancing efforts continues. As one chief executive officer put it, “People are the last thing we’ll invest in.” Another company has committed to keeping its general and administrative expenses flat, which will result in support staff cuts to offset the increased cost of technology investments and health care. Two other large contacts noted significant reductions of full-timers to avoid having to provide health care coverage and to “be more in line with the industry.” We increasingly hear more about firms restructuring employee health plans and benefits to reduce costs to the company, including shifting more cost burden to the employee, restricting eligibility for spouses who may have access to insurance elsewhere, and adding risk-based surcharges.

Education contacts noted that the ability to place graduates seeking work has improved. Stories abound regarding difficult-to-fill positions (truck drivers, IT, accounting, etc.), and reports of a willingness to increase starting salaries are mixed. Generally, there were few reports of wage pressures mounting (outside of the trucking industry). The news on input prices remains relatively quiet.

Our contacts noted that qualified mortgage rules—and regulations more generally—have the potential to affect the housing recovery. A mortgage and refinance company has cut the majority of its workforce as refinance volume diminishes but noted that current regulations are making first mortgages, especially to the self-employed, “nearly impossible” to issue. Two other small-banking contacts indicated they have discontinued providing residential mortgages. However, two residential real estate contacts did not indicate any major concern about clients’ abilities to obtain mortgage loans.

At the April meeting of the board of directors of the Jacksonville Branch, we asked board members whether the current and near-term environment reflects an economy that is growing at a 2 percent rate or one that is growing at 3 percent. The majority view activity now and in the coming year to be more closely aligned with a 3 percent growth rate. The board members feel that the biggest potential impediment to growth is related to the consumer, as many people continue to struggle and consumer confidence remains lower than before the recession (see the chart).

Florida Consumer Confidence

The old proverb goes, “No matter how long the winter, spring is sure to follow.” One could apply this adage to the Great Recession and the long recovery and ask: Has an economic “spring” finally sprung? We’ll be keeping tabs as the year plays out.

By Sarah Arteaga, a Regional Economic Information Network director in the Atlanta Fed's Jacksonville Branch


April 29, 2014

Is the Southeast Poised for Tourism Growth?

The Atlanta Fed's Travel and Tourism Advisory Council met at the Miami Branch for the first time this year on April 17. Overall, council members were enthusiastic about economic activity, and its benefits for the tourism sector, in the Southeast.

Georgia and Alabama bounced back from harsh weather conditions in January and February. The outlook for the next three months is positive, with contacts reporting a strong number of bookings and ticket sales. Florida's tourism benefited from the winter weather with travelers seeking warm weather or extending stays as a result of cancelled flights. Fort Lauderdale, in particular, indicated record numbers in February and March.

The Southeast experienced an increase in international tourist activity in 2013, primarily from Latin America and Europe. Participants noted domestic travelers were travel fatigued and are staying closer to home. Consumer spending increased from a year ago, not only in hotel and food expenditures but in retail stores as well. The increase in spending came primarily from luxury restaurants and hotels.

On the horizon for regional travel and tourism
The council discussed the increase in capital expenditures across the region, reporting heavy construction activity in new hotels, sports venues, and other attractions in addition to renovations of restaurants, hotels, and convention centers.

Technology enhancements continue to significantly affect the industry and are being implemented across many segments of the industry. For example, customers can now complete ticket sales for theme parks, sporting events, and other entertainment events as well as reservations for dinner or special services such as spa treatments prior to traveling. Travelers can electronically handle requests for food orders, hotel check-in, beach chair reservations, and maintenance requests once they have reached their destination. (Don't be surprised to find yourself handed an iPad upon arrival at your hotel to facilitate check-ins and any other needs during your stay.)

Tourism markets expand
Interestingly, the council indicated that families are using children's sporting events—like traveling little leagues—as their family vacation. In response to this growing market, the industry is developing special venues and events for these groups to include family- and sports-oriented activities.

The state of Florida is promoting itself as a destination for medical treatment as a way to expand its customer travel industry. The state is proposing legislation to require VISIT FLORIDA, the State's official marketing corporation, to market Florida as a medical destination. Business contacts in the health care field are also heavily marketing health care in the state to countries with an underdeveloped health care sector.

All that said, the travel and tourism sector looks promising in the near term, and new industry developments should enhance the vacation experience for those about to visit the Southeast.

By Marycela Diaz-Unzalu, an economic and financial education specialist in the Miami Branch of the Atlanta Fed