Dennis Lockhart, president and chief executive officer of the Atlanta Fed, spoke to Bonita/Estero Market Pulse Conference in Ft. Myers, Florida on March 25. He weighed economic "headwinds" and "tailwinds" that affect his outlook for the U.S. economy and gave his view regarding the outlook for employment growth:
"Employment has been growing gradually and incomes have been rising. Private payrolls have been increasing since February of last year.
"I want to make another point about employment growth, but this is a bit more speculative. In 2009, in pursuit of increased efficiency, businesses cut payrolls and met production needs with a smaller workforce. In contrast, over the past year, the scope for big efficiency or productivity gains seems to have narrowed. Going forward, meeting production goals in response to growing demand may more and more require hiring additional workers."
Discussing employment growth in southwest Florida was a difficult task; this region shed nearly 18 percent of total employment from its peak of 414,200 in September 2006 through the January 2011 trough of 342,600.
In addition, January unemployment rates for Fort Myers (12.7 percent), Naples (11.7 percent), and Punta Gorda (12.6 percent) are well above the national average.
President Lockhart also recognized that the decline in real estate activity has hit this region hard:
"Relative geographic strength can ebb and flow with industry conditions. For example, the Southeast—including Florida—is lagging other regions because before the recession, the Southeast was more dependent on construction activity, which is currently quite depressed."
How hard has the decline in this sector hit southwest Florida? The chart speaks for itself…
The sector is down 61.5 percent since September 2006.
In addition to President Lockhart's points that businesses are likely to continue to hire at a modest pace, Dr. Gary Jackson, director of Florida Gulf Coast University's Regional Economic Research Institute, notes in his latest edition of Southwest Florida Regional Economic Indicators that these conditions also apply to Florida:
"The U.S. economy and the Southwest Florida economy in particular continue to work through the systemic problems related to the housing bubble and banking crisis. The recovery to more normal employment levels is expected to take several more years, but we are seeing improvement in the overall economy."
Southwest Florida has a long way to go, but it does appear to be emerging from the downturn.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department