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Updates on the Economy

March 26th, 2010 · Leave a Comment

statsThis week, Prudential Network Realty held an “invitation only” event to hear Dr. David E. Altig, senior vice president and director of research at the Federal Reserve Bank of Atlanta, make a special presentation and economic update. In an engaging presentation, Dr. Altig outlined some very interesting statistics – some that bode well for Northeast Florida and some that we’ll need to watch closely. Here are a few highlights:

  • The good news is Dr. Altig assured the group that this would not be a double dip recession – commercial real estate included. Commercial real estate will be a concern, but not a big event like residential real estate.
  • Projections are for 2.5 percent to 3 percent GDP growth through third quarter 2011. (This comes from a blue chip panel of economists with pessimists saying 2 percent growth and optimists at 4 percent)
  • Some factors in the economy will create “a tepid crawl out of a deep event.” We will not grow like gangbusters as we have following other recessions.
  • Consumer spending is expanding modestly. The pace of spending has risen but remains below pre-crisis growth rate.
  • Housing wealth has stabilized, but prices are well below pre-recession rates.
  • Residential construction has stabilized at a low level and non-residential construction continues to slide.
  • The general sense is that the housing mini-boomlet that showed up at the end of 2009 was policy driven and has stalled.
  • Job growth is “negative to flat” and real incomes have stagnated. This is not going to get better soon. The only area in the country with job growth right now is Dallas.
  • Joblessness and underemployment could rise for a while longer and the real story is the underemployment figure. These are people who are part time or marginally attached. Underemployment is significantly higher than in past recessions. Many employers just don’t have enough work and won’t add employees until they can fully employ those that they have. This will slow the economic growth picture.
  • 2010 will be the worst year for bank closures.

To complete the picture, The Federal Reserve looks to the business community for feedback on what is happening anecdotally, but is not yet statistical. And the story for Northeast Florida is that Jacksonville is feeling much more optimistic than other areas in the district! Keep smiling!

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