Offering some optimism, University of North Florida professor Paul Mason said the Jacksonville economic outlook as of midyear appeared better than it has since before the recession.
“The local economy may have turned the corner toward gaining strength as we move into the middle of 2011,” Mason wrote in his latest LEIPLINE newsletter, an analysis of the economy April-June.
“We continue to believe that a positive stance is more warranted at this point than has been the case over the last four years,” he wrote.
The national recession began in December 2007 and ended in June 2009, although the recovery has been struggling.
Mason addressed that, too.
“We also believe that the private business sector will have to lead the charge, not the federal government. The sooner consumers, businesses, and especially all forms of government recognize this, the better,” he wrote.
Mason is an economics professor and chairs the UNF Coggin College of Business Department of Economics and Geography.
He also directs the UNF Local Economic Indicator Project.
His LEIPLINE newsletter focuses each quarter on four variables in the Jacksonville area: inflation, unemployment, the leading indicator and stock prices.
The project covers Baker, Clay, Duval, Nassau and St. Johns counties.
The most recent was the 19th installment of LEIPLINE.
Mason said he waits until at least the middle of the following quarter to report the previous quarter because data change.
Summarizing the local bottom line, Mason said the weakness in the local economic indicator, a performance measurement, is disconcerting.
“Data revisions may provide a different outcome in the coming months,” he wrote.
Mason referred, as of midyear, to the end of hostilities in Libya being on the horizon, less concern over foreign debt problems, declining oil and gasoline prices, and the debt discussion in Washington put on hold until later this year.
He also referred to “the continued opportunity for businesses to pass on higher costs to consumers combined with at least stabilized unemployment.”
Nationally, the Gross Domestic Product growth rate has slowed.
Mason analyzed the national economy and summarized it.
“The U.S. economy continues in a malaise that has now continued unabated since the recession ended in June 2009,” he wrote
He said it was hard to ignore “the parallels with the Japanese economy starting in 1990 and continuing until this day.”
“Each country’s government has extensively employed traditional demand side policy initiatives: quantitative easing, which is just another name for expansionary monetary policy; and government stimulus programs, which are nothing more than expansionary fiscal policy,” he wrote.
“Neither has been effective in either country,” he said.
Mason said that until private-sector businesses are stimulated with lower taxes, reduced regulation and incentives for small business development, or “decide on their own to grow their businesses and increase employment,” the U.S. and European economies will continue to stagnate.
“It has already continued in Japan this way for almost 22 years,” Mason wrote. “We do not think that the citizenry of the United States want to emulate the Japanese in this regard.”
LEIPLINE included an analysis of the four variables it tracks.
• The Jacksonville Consumer Price Index. The local CPI found inflation running at a 4.49 percent annual rate, higher than any full year since the LEIP was started in 2001.
Looking at July, the inflation rate through seven months indicated an annual average of more than 4.35 percent.
“There is no denying that inflation has returned,” said the newsletter.
While gasoline prices moderated, housing prices began to rise, as did prices in other categories such as clothing, school tuition, motor vehicle parts and equipment and recreational goods.
The outlook for the third quarter, July-September, suggests continued price increases, although “the perception that weakness has returned to the (national) growth rate may help mitigate some of the pressure to raise prices.”
• Unemployment. While the area unemployment rate “trended downward” during the second quarter, it increased slightly in July.
“Each of the last three months has seen local unemployment fall below the 10 percent level,” said the newsletter. “However, this is hardly indicative of a strong and escalating recovery.”
While the Duval County and metropolitan Jacksonville unemployment rates are still higher than the national average, “closer inspection of the numbers does reveal a positive trend that is stronger” than the rates appear.
The LEIP does not calculate the unemployment rate. It seasonally adjusts the state’s rate.
The outlook for the third quarter is likely to be stronger, despite the concern at the national level regarding slowing growth, said LEIPLINE.
“Clearly, the re-establishment of mass layoffs could derail the progress, but rising building permits, new small businesses openings and even building in the local area may imply a more bullish attitude,” it said.
“There is no expectation that booming economic growth locally is around the corner, but for a few months now we have perceived that Jacksonville, having spent the recession performing significantly worse than the national average, may be rebounding somewhat faster than the average over the last several months.”
• Leading Indicator. The LEI does not support a strong rest of the year. While the first-quarter measurements showed positive increases, the second-quarter numbers showed a collective decline.
The LEI measures consumer confidence, building permits and other factors.
“We are hopeful that the LEI will once again reverse itself” during the third quarter, “suggesting a stronger Christmas season.”
• Stock price index. The data collection for the stock price index is being revised.
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