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

 Sky Mall™ Policy:  An Expensive Policy that Fails to Achieve its Desired Outcome

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 $) Q1* 2013 Q4 Total Assets Financial Assets Home Equity Net Worth

U.S. Economic Outlook 2013 Q Q Q GDP % Change, Annual Rate Consumer Price Index % Change, Annual Rate Consumer Sentiment Consumption % Change, Annual Rate

 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 U.S. Forecast

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

February 2014 February 2013 Percent change Closed Sales15,82615,5911.5% Median Sale Price $165,000$150, % Median Days on Market % Inventory ( Months Supply ) % 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?

February 2014 February 2013 Cash as % of February 2014 Sales Florida7,5967, % Miami1,4291, % Tampa1,1221, % Jacksonville % Orlando % Housing Market Cash Sales

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  Is this a good thing or a bad thing?

Florida Forecast

Averages; Q Forecast Florida Sector % Average Annual Growth Construction8.7 Professional & Business Services4.3 Trade, Transportation & Utilities4.0 Education-Health Services2.3 Leisure & Hospitality1.9 Information1.8 Manufacturing1.3 Financial0.8 State & Local Government0.6 Federal Government

Region Population Growth Average % ChgRank Florida Deltona 1.18 Gainesville Jacksonville 1.44 Lakeland Miami 1.25 Naples 2.51 Ocala 1.73 Orlando 2.02 Palm Bay Pensacola 0.99 Tallahassee 1.17 Tampa Averages; Q Forecast

Region Employment Growth Average % ChgRank Florida Deltona Gainesville Jacksonville 2.26 Lakeland 1.99 Miami 2.34 Naples 4.31 Ocala 2.63 Orlando 3.02 Palm Bay 2.07 Pensacola 1.98 Tallahassee Tampa Averages; Q Forecast

Sean M. Snaith Sean M. Snaith, Ph.D.Director Institute for Economic Competitiveness (407) Thank you