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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.


April 24, 2014

Reaching the Public with Confidence

Last week's Beige Book noted that "economic activity increased in most regions of the country since the previous report." Here in the Sixth Federal Reserve District, we wrote that:

On balance, the Sixth District economy expanded at a modest pace from mid-February through March. Reports across sectors were optimistic and most business contacts expect near-term activity to grow at a moderate pace.

How did the Atlanta Fed come to this conclusion? It is a combination of several inputs, including a careful analysis of what our business contacts reported to us in a series of one-on-one meetings held throughout the region. But we also factor in what we hear from broader audiences, such as public speeches, presentations to professional or community groups, and industry- or geographic-specific meetings throughout the region.

Atlanta Fed economists and regional executives connect with their communities on a frequent basis. Such an approach allows us to reach a broad audience, and although we do not have the opportunity to perform deep dives like we do in our one-on-one meetings, we do get a good sense from the audience just how the local economy is performing.

For example, Adrienne Slack, our regional executive in New Orleans, delivered two talks on the Gulf Coast, one to a local group of businesses and one to an audience made up of businesses from throughout the country. What she heard confirmed our analysis that the economy in this region was performing somewhat better than the nation as a whole. She reported that:

The tenor of the Gulf Coast audience was optimistic and inquisitive about our thoughts regarding our forecast and the staying power of the recovery. The national audience was also keenly interested in our outlook; however, their own perspective was less optimistic. They too were seeing encouraging trends but not the growth and investment currently at play along the Coast.

Chris Oakley, our regional executive working from our Jacksonville Branch, delivered a talk in Tampa where he noted some concern regarding the level of confidence in our economic forecast. Chris was asked, "What makes you more confident that projections for growth in 2014 will come to fruition as compared to the last several years?" Chris responded that we were more confident that the economy would improve because of several factors, including:

  • Consumers have adjusted to the reinstatement of the 2 percent social security payroll tax;
  • There are no looming fiscal deadlines in the short term (debt ceiling, fiscal cliff, etc.); and
  • Economic weakness among some of our foreign trading partners appears to have abated.

"This environment is allowing for greater visibility and confidence, which translates to more investment and spending," Oakley said, echoing comments made by Atlanta Fed President Dennis Lockhart in a March 6 speech at Georgetown University:

Let me expand on my claim that the economy's fundamentals are stronger. I think basic conditions in several key sectors of the economy are much improved compared with earlier in the recovery period. I would cite banking, housing, energy, and manufacturing as examples.

Household balance sheets are much healthier now thanks to reduced debt, higher saving, and stronger asset prices, including higher home values.

Business and financial-system leverage has been significantly reduced from levels precrisis that were demonstrated to be unsustainable. Business profitability is good, and firm balance sheets are generally liquid.

Likewise, fiscal imbalances, while not solved for the long term, are somewhat less a near-term concern. Finally, employment markets are unquestionably in a better state compared to even a year ago.

President Lockhart continued:

At the same time, certain headwinds that have persistently buffeted the economy and restrained growth appear to have lessened. The fiscal drag associated with federal government budget austerity measures has eased. The risk of another financial meltdown emanating from Europe seems to have receded. Concerns about European sovereign debt and the exposure of the European banking system were an important source of uncertainty that weighed heavily on business confidence in the years 2011 and 2012, for instance.

Photo of Mike ChrisztBy Mike Chriszt, vice president in the public affairs department of the Atlanta Fed


April 23, 2014

Key Issues Fuel Discussion of Energy

The Atlanta Fed's Energy Advisory Council met on March 25 for its semiannual meeting to discuss current economic conditions in the energy industry. On the whole, council members were optimistic about the energy sector and expect growth in 2014 to be solid in most of the sector's areas. However, council members shared concerns about infrastructure and transportation constraints and labor trends.

The unusually severe winter weather—and its exposure of limitations in the U.S. natural gas distribution infrastructure—was also a key topic of discussion during the meeting. Demand for natural gas was high and regional supply was sufficient, yet transportation and distribution were severely limited, particularly to the Northeast. To meet the demand for utilities, many power providers resorted to using coal instead of natural gas.

Some council members spoke about the importance of the rail industry in the distribution of energy products; demand for rail fleet was high and expected to grow. Members expressed hope that increased use of rail transport would help resolve transportation issues, yet many energy representatives were concerned that the rail industry would not be able to build fleet fast enough to keep up with demand.

Council members also discussed ongoing shortages of skilled labor. A shortage of engineers has led businesses to consider offshoring engineering and conceptual work. Firms were also concerned that there would not be enough tradesmen to execute projects slated for implementation later this year and into 2015. The shortages have created backlogs and caused firms to offshore an increasing number of projects, particularly modular construction of plants, meaning that a company unable to find the skilled labor needed to construct a plant facility may instead have the plant constructed abroad in modules and shipped to the United States for assembly. The technology required to transport large parts and equipment has become readily available and has become more cost effective than it was a few years ago.

Overall, council members are optimistic about the present and future of the energy sector, even as they continue to encounter challenges that must be surmounted to allow the sector to continue to thrive.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed


March 28, 2014

An Economic Perspective from North and Central Florida

Over the course of the six weeks between the January and March Federal Open Market Committee meetings, my colleague Chris Oakley, the regional executive of the Atlanta Fed's Jacksonville Branch, and I met with 17 business leaders from across north and central Florida, as well as with members of our branch board of directors, to gain a broad perspective on current economic conditions.

Overall, most contacts indicated that that the stronger pace of activity experienced in the latter part of last year either has been sustained or should resume as the weather improves. (Unlike the rest of the country, Florida has been relatively untouched by the adverse winter weather. However, our contacts with a national footprint or those who experienced delayed parts deliveries, like manufacturing, construction, and food services, have noted disruptions in activity as a result of bad weather in certain markets.)

Designers and builders of both large and small enterprises noted a pick-up, especially in manufacturing, health care, and financial services, with one firm reporting a record backlog of projects due to organic growth and acquisitions. Other areas of strength for the state included tourism, housing construction, port activity, and an increasing number of retirees choosing Florida as their new home. On the flip side, banker contacts continued to be disappointed with a lack of loan demand among small business clients, but "tire kicking" appeared to have increased along with expectations for a higher level of activity this year. Restaurant contacts indicated worries about middle- and low-income consumers, whose disposable incomes are challenged with low wage growth and adjusting to increased health care premiums.

Florida has experienced a stronger rebound in new home permits than the nation since the beginning of 2014 (see the chart). Conversations with business contacts reflect this trend. Some residential home builders indicated that they are building spec homes with confidence that the properties will sell; one custom builder reported that his spec homes have been selling at 98 percent of the asking price. Banker contacts noted price increases as a result of both reduced real estate owned inventories on their books and a shortage of developed lots for new home construction. On the credit side, bankers reported that available credit now appears to have achieved some equilibrium with real estate demand. It was also noted that demand for rental property remains robust as some previous homeowners who lost their homes during the downturn have indicated no interest in owning another home and will continue to rent, at least in the near term.


Feedback regarding the labor market was mixed. We heard several stories about the inability to fill construction jobs, especially high-skilled positions. One contact speculated that this lack of talent could eventually result in a greater proportion of construction taking place in factory-like settings with only assembly occurring in the field, allowing for the use of greater automation in manufacturing components. Staffing contacts noted postrecession high levels of openings, and those workers with unique skills (often I.T. or accounting-related) were in the driver's seat and were able to dictate working conditions and have some leverage in compensation negotiations. A large manufacturer found success in partnering with Florida's universities and military veteran placement services to ensure an adequate supply of engineers and other high-skilled workers.

A good amount of discussion about increased labor costs focused on health care benefits, with sources sharing anecdotes about annual increases as high as 20 percent. A majority of contacts indicated they are passing along or sharing premium increases with employees. We also heard stories of companies reducing or discontinuing benefits for family members who might otherwise qualify for benefits elsewhere. Further, it was emphasized, especially among lower-wage, service-oriented companies, that the individual mandate of the Affordable Care Act is resulting in a larger number of eligible employees electing coverage, which is also driving up costs for the employer. A large design-build firm noted increased labor costs among its subcontractors, and a real estate rental firm indicated a "fair amount of wage pressure" for higher-level employees, such as property managers. In the government sector, both at the county and municipal levels, contacts commented on a resumption of wage increases among their constituents, the first for most since the recession.

With regard to nonlabor costs, developed land and construction material costs were both noted as concerns among construction contractors. Restaurant contacts expect food costs to rise about 4 percent this year, consistent with what they experienced in 2013, with increasing meat prices driving the rise. Banker contacts continued to point to rising regulatory and compliance costs. Overall, there appears to be more of an appetite for attempting to push through input cost increases through pricing, though the consensus is that any increase would be conservative.

So, overall, the takeaway from all of these anecdotes is that it's more of the same. While uncertainties are fewer and farther between than in the past couple of years, the outlook in the northern half of Florida appears a little less cloudy and even laced with cautious optimism. For a wider viewpoint on the economy across the Southeast, see the Atlanta Fed's latest Southeastern Insights.

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


March 4, 2014

Does Fat Tuesday Give New Orleans a Fat Wallet?

"Happy Mardi Gras!" is what's been enthusiastically shouted across the streets of New Orleans the past couple of weeks. Well, there's that and "Throw me something, Mister!" It's Mardi Gras season—a time of king cakes, wild and crazy Bourbon Street, and extravagant parades that include musicians, dancers, and colorful floats filled with masked locals who throw shiny plastic beads and trinkets to excited crowds. Though it may seem like a haze of decadence and chaos spanning two weeks in New Orleans, a lot of planning and money from locals and tourists alike goes into this lively time of year. More than a million people pack the city's streets during the two weeks leading up to Mardi Gras day, also known as Fat Tuesday (which falls on March 4 this year). So, what does Mardi Gras mean to the local economy?

In 2009, the Carnival Krewe Civic Foundation Inc. commissioned a biennial study of the economic impact of Mardi Gras. Tulane University economics professor Toni Weiss prepared the 2009 and 2011 reports. However, in 2013, New Orleans hosted the Super Bowl during Mardi Gras season, making it difficult to separate the economic effects of the two events. Therefore, the next study will reflect 2014 data.

According to the 2011 report, the economic impact on the city was $300 million, accounting for 1.5 percent of New Orleans's gross domestic product. It's worth noting that this figure is likely understated as it does not include incremental restaurant business, airport usage, or any businesses' fixed investment. It may also underestimate local citizens' Mardi Gras–related spending. Weiss evaluated seven main categories in the study: lodging and nonlodging, food and alcohol, merchandise, Mardi Gras–themed tours, Krewes (organizations of revelers who put on the parades, host Mardi Gras balls, and participate in social events throughout the year), Krewe members (the aforementioned revelers who spend their own money on the events), and the city government. Direct expenditures from these categories during the 2011 Mardi Gras season were an estimated $144 million.

So where did the other $156 million come from? According to Weiss, the Mardi Gras "franchise" the city created accounts for the difference. It includes an extensive infrastructure of lodging, food and drinking establishments, retail shops selling themed merchandise, and other factors from which other events and businesses (for example, conventions unrelated to Mardi Gras specifically) could benefit. The net fiscal benefit to the city was more than $13 million, or a return of $8.45 for every city dollar spent.

If you ask me, that's a pretty sizable return on investment—enough to fatten the city's wallet quite a bit.

Weiss's team will begin collecting data on the 2014 Mardi Gras season in a couple of weeks, and I look forward to seeing what the new results show.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the Atlanta Fed's New Orleans Branch


April 24, 2014

Reaching the Public with Confidence

Last week's Beige Book noted that "economic activity increased in most regions of the country since the previous report." Here in the Sixth Federal Reserve District, we wrote that:

On balance, the Sixth District economy expanded at a modest pace from mid-February through March. Reports across sectors were optimistic and most business contacts expect near-term activity to grow at a moderate pace.

How did the Atlanta Fed come to this conclusion? It is a combination of several inputs, including a careful analysis of what our business contacts reported to us in a series of one-on-one meetings held throughout the region. But we also factor in what we hear from broader audiences, such as public speeches, presentations to professional or community groups, and industry- or geographic-specific meetings throughout the region.

Atlanta Fed economists and regional executives connect with their communities on a frequent basis. Such an approach allows us to reach a broad audience, and although we do not have the opportunity to perform deep dives like we do in our one-on-one meetings, we do get a good sense from the audience just how the local economy is performing.

For example, Adrienne Slack, our regional executive in New Orleans, delivered two talks on the Gulf Coast, one to a local group of businesses and one to an audience made up of businesses from throughout the country. What she heard confirmed our analysis that the economy in this region was performing somewhat better than the nation as a whole. She reported that:

The tenor of the Gulf Coast audience was optimistic and inquisitive about our thoughts regarding our forecast and the staying power of the recovery. The national audience was also keenly interested in our outlook; however, their own perspective was less optimistic. They too were seeing encouraging trends but not the growth and investment currently at play along the Coast.

Chris Oakley, our regional executive working from our Jacksonville Branch, delivered a talk in Tampa where he noted some concern regarding the level of confidence in our economic forecast. Chris was asked, "What makes you more confident that projections for growth in 2014 will come to fruition as compared to the last several years?" Chris responded that we were more confident that the economy would improve because of several factors, including:

  • Consumers have adjusted to the reinstatement of the 2 percent social security payroll tax;
  • There are no looming fiscal deadlines in the short term (debt ceiling, fiscal cliff, etc.); and
  • Economic weakness among some of our foreign trading partners appears to have abated.

"This environment is allowing for greater visibility and confidence, which translates to more investment and spending," Oakley said, echoing comments made by Atlanta Fed President Dennis Lockhart in a March 6 speech at Georgetown University:

Let me expand on my claim that the economy's fundamentals are stronger. I think basic conditions in several key sectors of the economy are much improved compared with earlier in the recovery period. I would cite banking, housing, energy, and manufacturing as examples.

Household balance sheets are much healthier now thanks to reduced debt, higher saving, and stronger asset prices, including higher home values.

Business and financial-system leverage has been significantly reduced from levels precrisis that were demonstrated to be unsustainable. Business profitability is good, and firm balance sheets are generally liquid.

Likewise, fiscal imbalances, while not solved for the long term, are somewhat less a near-term concern. Finally, employment markets are unquestionably in a better state compared to even a year ago.

President Lockhart continued:

At the same time, certain headwinds that have persistently buffeted the economy and restrained growth appear to have lessened. The fiscal drag associated with federal government budget austerity measures has eased. The risk of another financial meltdown emanating from Europe seems to have receded. Concerns about European sovereign debt and the exposure of the European banking system were an important source of uncertainty that weighed heavily on business confidence in the years 2011 and 2012, for instance.

Photo of Mike ChrisztBy Mike Chriszt, vice president in the public affairs department of the Atlanta Fed


April 23, 2014

Key Issues Fuel Discussion of Energy

The Atlanta Fed's Energy Advisory Council met on March 25 for its semiannual meeting to discuss current economic conditions in the energy industry. On the whole, council members were optimistic about the energy sector and expect growth in 2014 to be solid in most of the sector's areas. However, council members shared concerns about infrastructure and transportation constraints and labor trends.

The unusually severe winter weather—and its exposure of limitations in the U.S. natural gas distribution infrastructure—was also a key topic of discussion during the meeting. Demand for natural gas was high and regional supply was sufficient, yet transportation and distribution were severely limited, particularly to the Northeast. To meet the demand for utilities, many power providers resorted to using coal instead of natural gas.

Some council members spoke about the importance of the rail industry in the distribution of energy products; demand for rail fleet was high and expected to grow. Members expressed hope that increased use of rail transport would help resolve transportation issues, yet many energy representatives were concerned that the rail industry would not be able to build fleet fast enough to keep up with demand.

Council members also discussed ongoing shortages of skilled labor. A shortage of engineers has led businesses to consider offshoring engineering and conceptual work. Firms were also concerned that there would not be enough tradesmen to execute projects slated for implementation later this year and into 2015. The shortages have created backlogs and caused firms to offshore an increasing number of projects, particularly modular construction of plants, meaning that a company unable to find the skilled labor needed to construct a plant facility may instead have the plant constructed abroad in modules and shipped to the United States for assembly. The technology required to transport large parts and equipment has become readily available and has become more cost effective than it was a few years ago.

Overall, council members are optimistic about the present and future of the energy sector, even as they continue to encounter challenges that must be surmounted to allow the sector to continue to thrive.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the New Orleans Branch of the Atlanta Fed


March 28, 2014

An Economic Perspective from North and Central Florida

Over the course of the six weeks between the January and March Federal Open Market Committee meetings, my colleague Chris Oakley, the regional executive of the Atlanta Fed's Jacksonville Branch, and I met with 17 business leaders from across north and central Florida, as well as with members of our branch board of directors, to gain a broad perspective on current economic conditions.

Overall, most contacts indicated that that the stronger pace of activity experienced in the latter part of last year either has been sustained or should resume as the weather improves. (Unlike the rest of the country, Florida has been relatively untouched by the adverse winter weather. However, our contacts with a national footprint or those who experienced delayed parts deliveries, like manufacturing, construction, and food services, have noted disruptions in activity as a result of bad weather in certain markets.)

Designers and builders of both large and small enterprises noted a pick-up, especially in manufacturing, health care, and financial services, with one firm reporting a record backlog of projects due to organic growth and acquisitions. Other areas of strength for the state included tourism, housing construction, port activity, and an increasing number of retirees choosing Florida as their new home. On the flip side, banker contacts continued to be disappointed with a lack of loan demand among small business clients, but "tire kicking" appeared to have increased along with expectations for a higher level of activity this year. Restaurant contacts indicated worries about middle- and low-income consumers, whose disposable incomes are challenged with low wage growth and adjusting to increased health care premiums.

Florida has experienced a stronger rebound in new home permits than the nation since the beginning of 2014 (see the chart). Conversations with business contacts reflect this trend. Some residential home builders indicated that they are building spec homes with confidence that the properties will sell; one custom builder reported that his spec homes have been selling at 98 percent of the asking price. Banker contacts noted price increases as a result of both reduced real estate owned inventories on their books and a shortage of developed lots for new home construction. On the credit side, bankers reported that available credit now appears to have achieved some equilibrium with real estate demand. It was also noted that demand for rental property remains robust as some previous homeowners who lost their homes during the downturn have indicated no interest in owning another home and will continue to rent, at least in the near term.


Feedback regarding the labor market was mixed. We heard several stories about the inability to fill construction jobs, especially high-skilled positions. One contact speculated that this lack of talent could eventually result in a greater proportion of construction taking place in factory-like settings with only assembly occurring in the field, allowing for the use of greater automation in manufacturing components. Staffing contacts noted postrecession high levels of openings, and those workers with unique skills (often I.T. or accounting-related) were in the driver's seat and were able to dictate working conditions and have some leverage in compensation negotiations. A large manufacturer found success in partnering with Florida's universities and military veteran placement services to ensure an adequate supply of engineers and other high-skilled workers.

A good amount of discussion about increased labor costs focused on health care benefits, with sources sharing anecdotes about annual increases as high as 20 percent. A majority of contacts indicated they are passing along or sharing premium increases with employees. We also heard stories of companies reducing or discontinuing benefits for family members who might otherwise qualify for benefits elsewhere. Further, it was emphasized, especially among lower-wage, service-oriented companies, that the individual mandate of the Affordable Care Act is resulting in a larger number of eligible employees electing coverage, which is also driving up costs for the employer. A large design-build firm noted increased labor costs among its subcontractors, and a real estate rental firm indicated a "fair amount of wage pressure" for higher-level employees, such as property managers. In the government sector, both at the county and municipal levels, contacts commented on a resumption of wage increases among their constituents, the first for most since the recession.

With regard to nonlabor costs, developed land and construction material costs were both noted as concerns among construction contractors. Restaurant contacts expect food costs to rise about 4 percent this year, consistent with what they experienced in 2013, with increasing meat prices driving the rise. Banker contacts continued to point to rising regulatory and compliance costs. Overall, there appears to be more of an appetite for attempting to push through input cost increases through pricing, though the consensus is that any increase would be conservative.

So, overall, the takeaway from all of these anecdotes is that it's more of the same. While uncertainties are fewer and farther between than in the past couple of years, the outlook in the northern half of Florida appears a little less cloudy and even laced with cautious optimism. For a wider viewpoint on the economy across the Southeast, see the Atlanta Fed's latest Southeastern Insights.

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


March 4, 2014

Does Fat Tuesday Give New Orleans a Fat Wallet?

"Happy Mardi Gras!" is what's been enthusiastically shouted across the streets of New Orleans the past couple of weeks. Well, there's that and "Throw me something, Mister!" It's Mardi Gras season—a time of king cakes, wild and crazy Bourbon Street, and extravagant parades that include musicians, dancers, and colorful floats filled with masked locals who throw shiny plastic beads and trinkets to excited crowds. Though it may seem like a haze of decadence and chaos spanning two weeks in New Orleans, a lot of planning and money from locals and tourists alike goes into this lively time of year. More than a million people pack the city's streets during the two weeks leading up to Mardi Gras day, also known as Fat Tuesday (which falls on March 4 this year). So, what does Mardi Gras mean to the local economy?

In 2009, the Carnival Krewe Civic Foundation Inc. commissioned a biennial study of the economic impact of Mardi Gras. Tulane University economics professor Toni Weiss prepared the 2009 and 2011 reports. However, in 2013, New Orleans hosted the Super Bowl during Mardi Gras season, making it difficult to separate the economic effects of the two events. Therefore, the next study will reflect 2014 data.

According to the 2011 report, the economic impact on the city was $300 million, accounting for 1.5 percent of New Orleans's gross domestic product. It's worth noting that this figure is likely understated as it does not include incremental restaurant business, airport usage, or any businesses' fixed investment. It may also underestimate local citizens' Mardi Gras–related spending. Weiss evaluated seven main categories in the study: lodging and nonlodging, food and alcohol, merchandise, Mardi Gras–themed tours, Krewes (organizations of revelers who put on the parades, host Mardi Gras balls, and participate in social events throughout the year), Krewe members (the aforementioned revelers who spend their own money on the events), and the city government. Direct expenditures from these categories during the 2011 Mardi Gras season were an estimated $144 million.

So where did the other $156 million come from? According to Weiss, the Mardi Gras "franchise" the city created accounts for the difference. It includes an extensive infrastructure of lodging, food and drinking establishments, retail shops selling themed merchandise, and other factors from which other events and businesses (for example, conventions unrelated to Mardi Gras specifically) could benefit. The net fiscal benefit to the city was more than $13 million, or a return of $8.45 for every city dollar spent.

If you ask me, that's a pretty sizable return on investment—enough to fatten the city's wallet quite a bit.

Weiss's team will begin collecting data on the 2014 Mardi Gras season in a couple of weeks, and I look forward to seeing what the new results show.

Photo of Rebekah DurhamBy Rebekah Durham, economic policy analysis specialist in the Atlanta Fed's New Orleans Branch