There were signs that the recovery was “finally gaining traction” during the fourth quarter, but the Jacksonville economy still has a way to go to return to full strength, according to the University of North Florida’s Local Economic Indicators Project, or LEIP.
“We’re seeing some improvement,” said UNF economics professor Paul Mason, who directs LEIP.
“It’s not massive improvement,” he said.
According to Mason’s quarterly LEIPLINE newsletter, the unemployment rate in the Jacksonville metropolitan area fell below 10 percent for each month of the fourth quarter, the first time that has happened since the first quarter of 2009.
And the Leading Economic Index for the Jacksonville area was positive for five straight months through November, indicating positive growth in the months ahead.
“With unemployment staying below double digits, the LEI rising, local stocks gaining momentum and moderate price increases, we are more optimistic at this point than any time since 2007,” LEIPLINE said.
But it also notes that the European economy, housing markets and oil prices are “flies in the ointment.”
LEIP produces four monthly indicators of the Jacksonville area economy: unemployment, the LEI, a Consumer Price Index and stocks of local companies.
LEIP does not gather data on unemployment but provides seasonally adjusted figures for the jobless rates published by the state, since the Florida Agency for Workforce Innovation does not adjust the Jacksonville data for seasonal trends.
For example, the agency reported that the Jacksonville area unemployment rate was 9.2 percent in December. But due to the normal Christmas season trend of increased hiring, LEIP said the seasonally adjusted jobless rate was somewhat higher at 9.58 percent.
Mason thinks the labor market outlook is “hopeful” for the first quarter of 2012.
“Consumer spending has been up so far this year and businesses seem more optimistic regarding sales later in 2012,” LEIPLINE said.
“However, much of the increase has been in manufacturing nationwide, which is not the primary business component in the Jacksonville MSA, and exports to more rapidly growing countries worldwide may be slowed by the European weakness outside of Germany,” it said.
The LEI rose by more than one point during the fourth quarter despite a sizable decline in the economic forecasting index in December. Mason said housing is the key component to that index.
“Until housing returns to some level of normalcy, the swings in the LEI will continue despite increased optimism from consumers and business entities,” LEIPLINE said.
Mason also said the glut of commercial real estate in the market could hold back economic growth.
Local stock prices were higher in all three months of the fourth quarter, but LEIPLINE said the ups and downs of local stocks seem to be mirroring the Dow Jones industrial average “without distinguishing themselves particularly.”
The CPI for the Jacksonville area compiled by LEIP rose by a seasonally adjusted 2.43 percent in 2011, higher than the inflation gauge has risen in recent years.
But the CPI fell by 2 percent in the fourth quarter and continued that trend into January, falling at an annualized rate of 4.6 percent despite rising oil prices.
“After local producers took advantage of opportunities to raise prices in the early part of 2011 as the result of rising gasoline prices and pent-up consumer demand for durables to replenish what they chose not to buy over the preceding three years, the second half of the year reinforced the impact of the recession on both consumer demand and producer risk aversion,” LEIPLINE said.
Mason said he doesn’t think the “shock value” of high gasoline prices is as bad as it was for consumers a couple of years ago. Still, a decline in gasoline prices would help the economy.
“If oil prices went down to where they should be, it would have a very significant stimulative effect,” he said.
What’s next for the Jacksonville economy? Mason is hoping the positive trends will continue.
“We are nowhere near the cyclical peak at this point, but we seem to have left the recessionary trough behind several months back. We are hopeful that three months from now we will be able to provide even more positive news,” LEIPLINE said.
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