1. The 2011 Economy: What Exactly Does a Recovery Look Like? R. Christopher Jones, Ph.D.

2. 2 So, where are we? We’re actually in a recovery that isn’t strong enough to make up the massive job loss  Recession technically over June 2009  6 consecutive quarters Real GDP growth  Decent growth in retail sales  Industrial production of business equipment up  Inflation and interest rates remain low, but food & fuel prices are rising  S & P 500 up 12 percent

3. 3 So, where are we? BUT..  We’ve only created 1.2 million jobs this year  We lost 8.6 million jobs in 2008 and 2009  GDP needs to grow at 3.5% or more to see significant improvement in unemployment rate  Industrial production of consumer goods and durable goods still anemic  Increasing Federal debt and expansive monetary policy creates inflation concerns  Housing sector still pathetic

4. 4 What about Florida? Still bad, worse than the nation as a whole  Real estate, tourism continue to suffer  Stimulus may be a “paper tiger” for Florida  Anti-growth supporters haven’t helped the cause The horse’s back is cracked  Growth & vacations carried us to prosperity  The recession stopped both  Tourist sector will rebound before real estate  We’re not really affordable anymore

5. 5 How Bad Is It? The “Good” News  We are recovering, yet modestly  We’ve had recessions of similar magnitude in the past, and we’ve recovered from them  Mid 70’s & early 80’s recessions  72% of economic growth positive since WWII  U.S. per capita GDP growth since 1890 has averaged just under 2% per year  Our ability to innovate has served as the cornerstone for prolonged economic growth

6. 6 How Bad Is It? The “Bad” News  We’re dealing with structural problems of a serious nature Monetary system is facing serious challenges An increasingly leveraged economy (debt) Relentless global competition Economic pressures created by generational shifts  Are we dealing with a “new normal”? Higher unemployment, lower incomes We’re in a “transitional struggle” w.r.t. production Tough choices lie ahead

7. 7 Who Rules the Global Roost? 2010 GDP Comparisons

8. 8 Long-Term GDP Growth 1890-2006

9. 9 U.S. Real GDP 1947-2010

10. 10 U.S. Real GDP Annualized % Growth 1947-2010

11. 11 U.S. Unemployment Rate 1948-2010

12. 12 U.S. Housing Starts (SAAR) 1959-2010

13. 13 Real Retail & Food Svcs. Sales 1992-2010

14. 14 Inflation (CPI-U) 1992-2010

15. 15 Real Per Capita Disposable Personal Income 1959-2010

16. 16 Credit Market Debt Per Capita 1959-2010 (infl. adj.)

17. 17 Consumer Sentiment 1978-2010

18. 18 Federal Debt 1971-2010

19. 19 2011 U.S. Forecast For the year, real GDP will grow by 3% Job growth will continue, but unemployment remains above 9% Stock markets grow by 6% - 8% Inflationary pressure in 2 nd half of 2011, driven by increasing fuel & food prices Global monetary instability will threaten a robust recovery It’s a slow crawl from a deep hole

20. 20 Florida: The Facts Dec. 2007 to Jul. 2010: Lost 930,800 jobs Equivalent to losing 92% of Orlando MSA, or 83% of Tampa-St. Pete-Clearwater MSA Jul. – Nov. 2010: Gained 131,500 jobs 11.6% unemployment (Dec. 2010) 14,346 housing starts from Aug. – Dec. ’10, compared to 20,934 starts Aug. – Dec. ’08 Home prices are down 35.6% from their Q4 2006 peak – comparable with early 2004 prices

21. 21 The I-4 Corridor (Tampa to Orlando) Dec. 2007 to Jul. 2010: Lost 283,200 jobs Equivalent to losing all of Seminole County, 1.6x Pasco County, or 1.3x Polk County Jul. – Nov. 2010: Gained 49,100 jobs Unemployment (Dec.): Tampa MSA 12.0%, Orlando MSA 11.3%, Lakeland MSA 12.5% Pasco: Lost 7,969 jobs Dec. ’07 to Jul. ’10 Jul. – Nov. 2010, Pasco: Lost 2,922 jobs Pasco (Dec.): 13.0% unemployment

22. 22 The I-4 Corridor (Tampa to Orlando) Aug. – Dec. ’10 Housing Starts: 4,366  30.4% of state total (14,346) Aug. – Dec. ’08 Housing Starts: 7,394  35.3% of state total (20,934) Pasco Aug. – Dec. ’10 Starts: 636  26.7% of Tampa MSA (2,207) Pasco Aug. – Dec. ’08 Starts: 1,068  28.8% of Tampa MSA (4,004)

23. 23 Florida Metro Economic Activity 2008-2010

24. 24 Florida Home Price Index (Q1 1980 = 100)

25. 25 The Question of Florida Recovery When?  We may just be hitting bottom now  Some signs of stabilization/uptick How?  Yesterday’s model won’t work tomorrow (growth fueled by low-cost housing and loose mortgages) Central Florida Especially Vulnerable  Less economically diverse than S. Florida  30% of the state’s job losses in I-4 corridor  I-4 is the only major artery linking the Tampa and Orlando markets

26. 26 The Good News for Florida Amendment 4 defeated Governor Scott seen as pro-growth 2010-11 open-market operations ($600B) by the Fed may stimulate lending & investment “Price Sanity” is returning to the Florida marketplace

27. 27 Florida’s Challenges The housing free-fall may not be finished  Mortgage underwriters fear 2011 foreclosures may surpass 2010 levels Rail transit projects are not a complete lock  Elections may have changed the complexion of a “fully funded” high-speed rail State and local budgets are stressed to the breaking point  Infrastructure and education dollars are in short supply

28. 28 Florida Recovery North v. South  Southeast Florida’s more diversified economy will recover before the rest of the state  SW and Central Florida, heavily dependent on real estate and population growth, will continue to sputter through late 2011  Unemployment around 10.5 percent by early 2012 The “New” Normal  Slower growth in traditional economic sectors  Future prosperity reliant on further diversification of the economic base