In one of the cheerier economic forecasts in some time, PNC senior economist Augustine Faucher predicts positive turns in just about every indicator, including that stretched employees might find help and job seekers might find work.
“Businesses are in pretty good shape and they’re going to start to hire,” Faucher told almost 60 members and guests of the Association for Corporate Growth’s North Florida Chapter on Thursday.
Faucher, a vice president for The PNC Financial Services Group in Pittsburgh, said businesses relied on employees to increase productivity during the recession.
“There was very strong productivity growth,” he said. But for business expansion, stretching existing employees isn’t practical.
“Businesses are finding they can’t reply on productivity growth,” he said.
Faucher said that in general, profits are high, labor costs are low and labor costs less now than it did in 2008 because of the productivity of workers.
Businesses, who stashed cash since 2008 during the recession and the start of the recovery, now need to spend some. That’s six years of flat investment.
“Businesses have a lot of pent-up demand,” Faucher said. “They’re going to go out and invest.”
Faucher’s presentation at The River Club focused on the end of deleveraging and better growth in 2014. He said deleveraging, which is paying down debt, took place with government, businesses and consumers.
All took steps to rid themselves of high-cost debt, which was good for their bottom lines but crimped spending.
Faucher said those deleveraging waves are done.
In general:
• The U.S. economy will look stronger in 2014 than it did in 2013. “We will see noticeably better economic growth than we did last year,” he said.
• Jobs are down by 700,000 from the pre-recession peak, meaning the almost 9 million jobs lost in the downturn are almost accounted for. A new employment peak could be reached in mid-2014.
• Consumers paid off cars and credit cards and spent less. “Consumer balance sheets are in fantastic shape,” he said, predicting solid growth in consumer spending in 2014 and 2015.
• Mortgage rates have been low and may gradually increase as the Federal Reserve reduces its monthly long-term bond purchases as the economy improves. The Fed said short-term rates could stay at a record low “for a considerable time” after the bond purchases end. It was clarifying previous comments by Fed Chair Janet Yellen that suggested rates could rise six months after the Fed ends the bond purchases, indicating short-term rates could rise by mid-2015.
• Housing statistics are improving. More houses are being built and prices are rising. The large number of foreclosed homes and short sales along with low borrowing rates attracted investors. “Somebody said, ‘this is a good opportunity,’” he said. People started to buy and prices started to improve. Housing prices are about 20 percent below the peak, and homeowners are building household wealth.
• The unemployment rate continues to decline and should drop to 5.5 percent by the end of 2015.
Asked by a participant about the Affordable Care Act, Faucher expects a short-term drag on the economy, but an even landscape over the longer-term. With the act, people can access health insurance without relying on an employer. “People can start businesses and change jobs” without fear of losing access to health insurance, he said.
Asked what would worry him about the economy, Faucher said: “I’m a lot less worried about things now than I was.”
As for Jacksonville, Faucher said that as of the third quarter of 2013, “conditions were better but not great.”
He said employment growth had a “long way to go” and that housing prices remain 30 to 35 percent from their peak levels, although they have come back from the 50 percent decline during the recession. He expects housing prices to gradually improve.
He expects population growth to pick up in the next few years.
Any cut in federal defense spending could cause a drop in the Jacksonville economy given the number of military bases and jobs in Northeast Florida, he said.
Sysco continues NW project
Sysco International Food Group will demolish a smaller warehouse building it bought next to its remodeled distribution center in Northwest Jacksonville.
“This is part of the planned, overall remodeling/renovation process,” Sysco Corp. communications director Wendy Olson said Thursday by email.
She said the smaller center at 3000 45th St. is adjacent to its newly remodeled facility. “IFG has no immediate plans for the property,” she said.
The city approved a permit Wednesday for Primus Builders Inc. to demolish the 32,000-square-foot warehouse at a project cost of $97,550.
As the Daily Record reported in January, Sysco International Food Group is making a minimum $12.6 million investment in Northwest Jacksonville, based on construction and acquisition costs.
The food-service supplier is renovating a 195,000-square-foot warehouse at 3100 Hilton St. at a construction cost of $11.7 million, and it bought the smaller center in December for $915,000. Sysco had said it was for expansion.
A Sysco Corp. spokesman previously told the Daily Record it will renovate the large warehouse to accommodate an expansion of its Plant City-based International Food Group operation, a move expected to create 60 jobs by early summer. Primus is the contractor.
The International Food Group distributes and exports products to Sysco customers outside the United States. Sysco is based in Houston.
PARC Group again named developer of the year
The PARC Group, the master developer of Nocatee, was named developer of the year for the seventh consecutive year by the Northeast Florida Builders Association Sales and Marketing Council.
The award follows Nocatee’s ranking as the fifth best-selling master-planned community in the nation by both John Burns Real Estate Consulting and real estate advisory firm RCLCO.
In 2013, Nocatee sold 838 homes, up 65 percent from 2012, making it the fastest-growing of the nation’s top 10 master-planned communities. Four new Nocatee neighborhoods opened and its first neighborhood, Austin Park, sold out.
This year, nine new Nocatee neighborhoods will open, and the new St. Johns County K-8 school, the Valley Ridge Academy, will open in August.
Phoenix Realty closes Baymeadows sale, opens Georgia office
Another senior living project – possibly the area’s 14th in development or planning – is on track to open in the Baymeadows area.
Jim Sebesta and Lee Stine with Newmark Grubb Phoenix Realty Group represented the sellers in the sale of 14 acres on San Jose Boulevard, just south of Goodbys Creek, to Starling Senior Living of Jacksonville for $1.75 million.
Records filed with the Duval County Clerk of Court show that SSL San Jose LLC bought the property Feb. 12 from 9069 San Jose LLC.
Construction is set to start in the fall on a 75,000-square-foot n assisted living facility of 24 memory care and 65 assisted living units. It could hire 35 to 40 full-time employees.
Meanwhile, Newmark Grubb Phoenix Realty, which began in 1993, has opened an office on St. Simons Island, Ga. It hired Kirk Watson as executive vice president, who will lead a team to expand its portfolio of commercial properties and investments.
“This is an opportune time to extend our focus to that marketplace,” said Sebesta, CEO of Phoenix Realty.
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