3 4 2011 mdc econ cond

1

Miami-Dade Current Economic Conditions and

2011 OutlookMarch 2011

Robert D. Cruz, PhDChief Economist, Miami-Dade County

Office of Economic Development and International [email protected]

www.miamidade.gov/economicdevelopment

Office of Economic Development and International Trade

Office of Economic Development International Trade 2

• Summary• Labor Market Indicators• Taxable Sales• International Trade• Tourism• Housing Market/Foreclosure Activity• U.S. GDP growth

Contents

Office of Economic Development and International Trade 3

• Economic recovery continues in Miami-Dade, but like the national economy the pace of recovery has slowed in the 2nd half of this year.

• National economic recovery hit a “soft patch” in 2nd quarter 2010 (2Q10), but appears to have picked up in 2nd half of 2010.• National economic recovery began in the 3Q09 and the robust

growth in 4Q09 and 1Q10 was led by businesses rebuilding their stock of inventories.

• Economic recovery in last six months of 2010 was supported by gains in personal consumption spending and other components of final demand, but rising imports muted their effects in 2nd and 3rd quarters 2010.

• Keeping positive momentum in final sales is key to maintaining economic recovery, and eventually accelerating job growth, but uncertainty over federal spending policy clouds the outlook for the pace of recovery.

Summary of 2010


• Payroll employment in Miami-Dade is on a slow upward trend, but job losses in the public sector are offsetting some of the gains in the private sector.

• Unemployment rates remain high (13.3% in Nov), but county residents holding jobs increased by 11,400 between Nov-09 and Nov-10. Labor force grew by 41,000 over the same period, driving unemployment rate higher.

• Business bankruptcies remain high (restraining hiring), and consumer bankruptcies still rising (an indicator to keep monitoring).

• Local taxable sales (in spite of personal bankruptcies) and international trade are bright spots in the local economy.

• Tourism is stronger than last year with occupancy and average room rates comparatively higher.

• Positive momentum in SF housing market has diminished since the summer, while bargain hunting in the condo market driving higher sales.

• Bank foreclosures ending year higher but initial filings have declined: drop in REO foreclosures expected to follow the decline in filings.

• December’s Congressional compromise on fiscal policy suggest prospects are better for a sustained and moderate acceleration in U.S. economic growth in 2011, which will support more robust local economic growth.

Summary of 2010


• The business cycle in Miami-Dade during this recession and recovery has closely tracked the national economy.

• Miami-Dade economy is relatively less dependent on construction activity than other parts of Florida, and its drivers of tourism sector are different (more international/less domestic; more targeted towards adults and higher income/wealth).

• Relatively stable sectors like Professional and Business Services, Healthcare and Education represent relatively higher shares of the local economy.

• Probability U.S. GDP growth in 2011 in the 2.5-3% range is higher as a result of recent legislative action to keeping income tax rates from rising and 32% payroll tax cut for 2011.

• U.S. GDP growth at near 3% (or higher), combined with continuing economic strength in Latin American trading partners, should lead to an acceleration in local economic and employment growth.

• Infrastructure projects will help support construction jobs, but significant recovery in this sector not likely until 2012.

Pace of U.S. Recovery the Key Determinant of Local Economic Growth in 2011


Non-Agricultural Payroll Employment• 825,500 seasonally adjusted (SA) private sector payroll jobs in Dec vs 820,900 at low point in the recession (Nov 09).• 976,400 total payroll jobs in Dec vs. 973,300 in Nov 2009.•Private sector jobs account for all the increase in payroll jobs since November 09; govt jobs down about 1.0%• Growth in payroll jobs since Nov 09 is evidence of economic recovery, but pace of job growth is basically flat.

Note: Non-agricultural payroll employment refers to persons working in Miami-Dade regardless of their place of residence and does not include self-employed, unpaid family workers or private household workers.

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

950

970

990

1,010

1,030

1,050

1,070

810

830

850

870

890

910

930

Miami-Dade Nonfarm Payroll EmploymentThousands of Jobs, Seasonally Adjusted

Total Nonfarm Total Private (Rt Axis)

Data Source: Florida Agency for Workforce Innovation


• Industries showing job growth in 2010• Education and Healthcare: +5,000 (+3.1%) Dec/Dec 2009. • Wholesale Trade: +3,000 (+4.5%) in Dec/Dec 2009• Retail Trade: +2,200 (+1.8%).• Leisure and Hospitality: +1,100 (+1.0%).• Transport and Warehousing: +600 (1.0%)

• Job losses in broad industry groups• Construction jobs had stabilized through September at around

33,000, but fell in 3rd Qrtr of 2010 to close at 30,700, (-9.7%, Dec/Dec).

• Employment declines were significant in Financial Activities (-2.1%), Information (-5.3%), Manufacturing (-4.2%).

• Professional and Tech Svs lost 3.2%

Recent Job Growth by Major Industry Group


Residents with Jobs• Unemployment rates continue to climb (13.2% in Dec, SAR) despite 4 consecutive months of employment gains.• From August to December, the County experienced a net gain 7,400 County residents holding jobs, but an additional 21,800 joined the labor force. • At the end of 2010 Miami-Dade had 12,900 more residents holding jobs in Dec than in Dec 2009, but the labor force grew by 44,600 over the same period.• Initial filings for unemployment have been trending lower, however, in the last few months.

Dec

-07

Feb

-08

Ap

r-08

Jun

-08

Au

g-0

8

Oct

-08

Dec

-08

Feb

-09

Ap

r-09

Jun

-09

Au

g-0

9

Oct

-09

Dec

-09

Feb

-10

Ap

r-10

Jun

-10

Au

g-1

0

Oct

-10

Dec

-10

1,000,000

1,050,000

1,100,000

1,150,000

1,200,000

1,250,000

1,300,000

1,350,000

4%

6%

8%

10%

12%

14%

16%

18%

Labor Force , Employment, Unemployment: Miami-Dade County

(In Thousands, Seasonally Adjusted)

Data Source: Bureau of Labor Statistics

Labor Force

Unemployment Rate (right axis)

Employed


Initial Unemployment ClaimsInitial Unemployment Claims (Intrastate & Agent Claims) by County

Change from: % Change from: Dec-10 Nov-10 Dec-09 Nov-10 Dec-09 Nov-10 Dec-09

BROWARD 6,840 7,425 7,712 -585 -872 -7.9% -11.3% MIAMI-DADE 10,280 10,050 11,590 230 -1,310 2.3% -11.3% PALM BEACH 4,604 4,768 5,518 -164 -914 -3.4% -16.6% FLORIDA 90,766 86,871 98,339 3,895 -7,573 4.5% -7.7%Data Source: Florida Agency for Workforce Innovation.

Dec-07

Feb-08

Apr-08

Jun-08

Aug-08

Oct-08

Dec-08

Feb-09

Apr-09

Jun-09

Aug-09

Oct-09

Dec-09

Feb-10

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Miami-Dade Initial Unemployment Claims

claims

Data Source: Florida Agency for Workforce Innovation.


After signs of stabilization in 2nd half of 2009, unemployment rates increase in 2010 in MDCD

ec-0

7

Feb-

08

Apr

-08

Jun-

08

Aug

-08

Oct

-08

Dec

-08

Feb-

09

Apr

-09

Jun-

09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Apr

-10

Jun-

10

Aug

-10

Oct

-10

Dec

-10

2%

4%

6%

8%

10%

12%

14%

16%

Comparative Unemployment Rates(Not Seasonally Adjusted)

Miami Dade BrowardPalm Beach FloridaUS

Data Source: Florida Agency for Workforce Innovation.

Unemployment Rates (Not Seasonally Adjusted) Oct Nov DecMiami-Dade 13.1% 13.0% 13.2%Broward 10.1% 10.8% 10.2%Palm Beach 11.7% 12.3% 11.5%Florida 11.6% 12.2% 11.6%

Percentage Point Change from Same Month Prior YearMiami-Dade 1.3% 2.5% 1.7%Broward 0.1% 0.6% 0.0%Palm Beach -0.2% 0.5% -0.2%Florida 0.1% 0.8% 0.0%


• Business bankruptcies were on the decline towards the end of 2009 but increased in 2010.

Financial Health of Local BusinessesFe

b-08

Mar

-08

Apr

-08

May

-08

Jun-

08Ju

l-08

Aug

-08

Sep-

08O

ct-0

8N

ov-0

8D

ec-0

8Ja

n-09

Feb-

09M

ar-0

9A

pr-0

9M

ay-0

9Ju

n-09

Jul-

09A

ug-0

9Se

p-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10Fe

b-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep-

10O

ct-1

0N

ov-1

0D

ec-1

0Ja

n-11

0

10

20

30

40

50

60

70

Business Bankruptcy Filings: Miami-Dade

Source: U.S. Bankruptcy Court, Southern District

Avg ‘06 = 12Avg ‘07 = 25Avg ‘08 = 45Avg ‘09 = 43Avg ‘10 = 49


• Length of recession is taking its toll on households. Financial stress on households is rising again as unemployment remains high and fewer opportunities to restructure debt.

Financial Health of Local ConsumersFe

b-08

Mar

-08

Apr

-08

May

-08

Jun-

08Ju

l-08

Aug

-08

Sep-

08O

ct-0

8N

ov-0

8D

ec-0

8Ja

n-09

Feb-

09M

ar-0

9A

pr-0

9M

ay-0

9Ju

n-09

Jul-

09A

ug-0

9Se

p-09

Oct

-09

Nov

-09

Dec

-09

Jan-

10Fe

b-10

Mar

-10

Apr

-10

May

-10

Jun-

10Ju

l-10

Aug

-10

Sep-

10O

ct-1

0N

ov-1

0D

ec-1

0Ja

n-11

0200400600800

1,0001,2001,4001,6001,8002,000

Consumer Bankruptcy Filings: Miami-Dade

Source: U.S. Bankruptcy Court, Southern District

Avg ‘06 = 271Avg ‘07 = 390Avg ‘08 = 663Avg ‘09 = 950Avg ’10 = 1,450


• Seasonally adjusted taxable sales for the 2nd half 2010 increased at an annualized rate of 8% from 1st half of 2010.

• The strong gains in in the 2nd half were led by• Tourism & Recreation (+11%)• Consumer Durables (+12%)

• Taxable sales of construction materials and business equipment have started to show a positive trend as well.

• Bldg materials/supplies (+10%)• Business equipment (+5%)

Taxable Sales, Seasonally Adjusted

Approximately 45% of taxable sales are comprised of consumer durables (10%) and non-durables (35%).

2,200,000,000

2,400,000,000

2,600,000,000

2,800,000,000

3,000,000,000

3,200,000,000

3,400,000,000

3,600,000,000

1,100,000,000

1,200,000,000

1,300,000,000

1,400,000,000

1,500,000,000

1,600,000,000

1,700,000,000

1,800,000,000

Miami-Dade Taxable SalesSeasonally Adjusted, Million $

Total Salesnon-linear trendlineConsumer Dur. & Non-Dur. (Right Axis)

Data Source: FL Office of Econ. and Demog. Research; OEDIT

nonlinear trend-line


• Recovery in trade activity through Miami-Dade airport and seaport continues.

• Both exports and imports are growing since approximately the 2nd quarter of 2009 (trough).

International Trade from Miami-Dade

Jan-0

9Feb-0

9M

ar-

09

Apr-

09

May-0

9Ju

n-0

9Ju

l-09

Aug-0

9Sep-0

9O

ct-

09

Nov-0

9D

ec-0

9Ja

n-1

0Feb-1

0M

ar-

10

Apr-

10

May-1

0Ju

n-1

0Ju

l-10

Aug-1

0Sep-1

0O

ct-

10

Nov-1

0D

ec-1

0

600800

1,0001,2001,4001,6001,8002,0002,200

2,000

2,200

2,400

2,600

2,800

3,000

3,200

3,400Miami International Airport Trade

Millions of Dollars (Seasonally Adjusted)

Imports (Left Axis)

500

600

700

800

900

1,000

1,100Port of Miami Trade

Millions of Dollars (Seasonally Ad-justed)

ExportsImports


• Federal Housing Finance Agency (FHFA) repeat sale price index includes mortgage refinancings.

• Prices essentially unchanged for 9 months.

• HPI in 3Q 2010 was down 40% from its peak in 2Q 2007.

Miami-Dade Home Price Index (HPI)

The FHFA HPI for Miami-Dade includes all types of residential units and appraised values according to applications for refinancing.

283

176 171

169

170

120

140

160

180

200

220

240

260

280

300

20

07

:1

20

07

:2

20

07

:3

20

07

:4

20

08

:1

20

08

:2

20

08

:3

20

08

:4

20

09

:1

20

09

:2

20

09

:3

20

09

:4

20

10

:1

20

10

:2

20

10

:3

Miami-Dade Housing Price Index1Q 2000 = 100.0

Data Source: Federal Housing Finance Agency


• Slight increase in permits issued but conditions for a significant increase in residential construction appear unlikely until late 2011 or early 2012.

Residential Construction Activity

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000 Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

Qtr

4Q

tr1

Qtr

2Q

tr3

2003 2004 2005 2006 2007 2008 2009 2010

Miami-Dade New Privately-Owned Res. Building Permits (Housing Units)

Data Source: US Census Bureau 2010 Building Permits.


Mortgage Rates

Steady decline in mortgage rates since April have not led to rise in local sales of existing SF homes or signs of new residential construction.

4.00

4.50

5.00

5.50

6.00

6.50

7.00

Jan

Feb

Mar

Apr

May Jun Jul

Aug Se

pO

ctN

ov Dec Jan

Feb

Mar

Apr

May Jun Jul

Aug Se

pO

ctN

ov Dec Jan

Feb

Mar

Apr

May Jun Jul

Aug Se

pO

ctN

ov Dec Jan

Feb

Mar

Apr

May Jun Jul

Aug Se

pO

ctN

ov Dec

2007 2008 2009 2010

30-year Conventional Mortgage RatesAnnual Percentage Rate

Data Source: Board of Governors of the Federal Reserve System

18Office of Economic Development and International Trade

REO Foreclosures

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

2010

Q3

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

REO ForeclosuresMiami-Dade County (Residential Proper-

ties)

Data Source: RealtyTrac

2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 REOs 3,383 2,047 1,908 2,097 3,180 1,826 5,556 5,871 Yr/Yr % Chg 145% 20% -34% -26% -6% -11% 191% 180%


Foreclosure Filings: Clerk of Court

Number of initiated foreclosure actions peaked at 1Q of 2009 and have been on a downward trend since then.

-150%

-100%

-50%

0%

50%

100%

150%

200%

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Nov

-08

Dec

-08

Jan-

09Fe

b-09

Mar

-09

Apr

-09

May

-09

Jun-

09Ju

l-09

Aug

-09

Sep-

09O

ct-0

9N

ov-0

9D

ec-0

9Ja

n-10

Feb-

10M

ar-1

0A

pr-1

0M

ay-1

0Ju

n-10

Jul-1

0A

ug-1

0Se

p-10

Oct

-10

Foreclosure Filings andPercent Change From Prior Year

Total Filings

Year/Year Pct Chg (Rt Axis)

May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10

Filings 2,621 2,840 2,901 3,158 3,206 1,718

Yr/Yr % Chg -38.7% -41.3% -44.0% -28.8% -36.3% -66.2%


• The business cycle in Miami-Dade during this recession and recovery has more closely tracked the national economy than the rest of Florida.

• Miami-Dade economy is relatively less dependent on construction activity than other parts of Florida, and drivers of its tourism sector are different (more international, less domestic; targeted more towards adult and higher income/wealth)

• Relatively stable sectors like Professional and Business Services, Healthcare and Education represent a relatively higher share of the local economy.

• Probability U.S. GDP growth in 2011 in the 2.5-3% range is higher as a result of recent legislative action to keep income tax rates from rising and other important stimulus elements in the legislation.

• U.S. GDP growth at near 3% (or higher), combined with continuing economic strength in Latin American trading partners, would lead to an acceleration in local economic and employment growth.

• The foundation for acceleration in U.S. GDP growth is present

Pace of U.S. Recovery a Key Determinant of Local Economic Growth in 2011


• After robust growth in GDP in 4Q 2009 and 1Q 2010, GDP growth decline from 2nd to 4th quarters, reflected a slowdown in the pace of recovery.

• Despite 6 consecutive quarters of GDP growth, the pace of expansion not yet resulting strong employment gains.

Pace of U.S. Economic Recovery

recession

GDP growth rates are adjusted for price inflation; i.e. they represent growth in “real GDP.”

expansion

200

7-IV

200

8-I

200

8-II

200

8-III

200

8-IV

200

9-I

200

9-II

200

9-III

200

9-IV

201

0-I

201

0-II

201

0-III

201

0-IV

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2.9

-0.7

0.6

-4.0

-6.8

-4.9

-0.7

1.6

5.0

3.7

1.72.6 2.8

Pct Change in GDP From Prior QuarterSeasonally Adjusted at Annual Rates


Contributors to U.S. Economic Growth• Acceleration in GDP growth

in 4Q 2009 and 1Q 2010 led by rebuilding of inventories.

• Growth in exports and consumer spending are supporting recovery.

• Final (aggregate) demand through 3Q provided growth but growing imports were a strong drag on 2Q and 3Q growth.

• Growth in 4Q propelled by final demand but inventory correction kept rate below 3%

Seasonally adjusted percent change in in Real GDP from prior quarter at annual rates.

Data Source: U.S. Department of Commerce, BEA.

Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

1.6

5.03.7

1.72.5 2.8

Contribution to GDP Growth

Pers. Consumer Spending Gross Fixed InvestmentChange in Inventories ExportsImports GovernmentTotal GDP

Perc

ent C

hang

e


• Corporate profits have nearly doubled from their recession low point, and up 24% from the start of the recession.

• Proprietors’ income and employee wages and salaries starting to show consistent, though modest gains.

Corporate Profits 2

007-

IV

200

8-I

200

8-II

200

8-III

200

8-IV

200

9-I

200

9-II

200

9-III

200

9-IV

201

0-I

201

0-II

2010

-III

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

U.S. Corporate Profits and Proprietors' IncomeBillion $, Seasonally Adjusted Annual Rates

Corporate Profits

Corporate profits up 24% from 4Q 2007. Proprietors' in-come are down 3% from end of 2007.


• Despite increases in domestic production and profits, U.S. job growth has been weak.

• Recent growth in final demand for goods and services has been met through higher labor productivity and (until 4Q) imports, rather than new hires.

• Ability to squeeze more output from existing workforce is limited. We are likely near the point where growing demand induces more robust hiring.

• Cost of labor per unit of economic output is starting to rise as opportunities for further productivity gains narrow.

• Maintaining growth of aggregate demand is an important key to job growth.

GDP Growth, Profits and Jobs20

07-I

2007

-II

2007

-III

2007

-IV

2008

-I

2008

-II

2008

-III

2008

-IV

2009

-I

2009

-II

2009

-III

2009

-IV

2010

-I

2010

-II

2010

-III

2010

-IV

85.0

90.0

95.0

100.0

105.0

110.0

115.0

Productivity and Employment Private Business Sector

Output per Worker Employment

Inde

x, 2

005

= 10

0

U.S. Bureau of Labor Statis-tics

+9.3%

3 4 2011 mdc econ cond

Documents