Much of the nation's economic forecasting these days centers on the uncertainty surrounding the so-called "fiscal cliff," as the president and Congress negotiate a deal on tax rates and federal spending.
The sense seems to be that once they come to an agreement and remove the uncertainty, the economy will start moving again.
That's not necessarily true, according to the University of North Florida's Local Economic Indicators Project's quarterly newsletter, LEIPLINE.
"It depends on what kind of agreement they come to," said UNF economist Paul Mason, who runs LEIP.
If the government agrees to a short-term solution and pushes big decisions ahead to a later date, that won't help.
"The way to enhance growth is for the federal government to reduce uncertainty with definitive and permanent changes to the tax code, improved conditions for the growth of small businesses, reduction of burdensome regulations, and mostly, the removal of political influences from the business world and the economy in general," LEIPLINE said.
The newsletter refers to the record of the Japanese economy over the past two decades to show that no one should assume everything will be fine in the U.S.
"The return to more desirable growth is generally assumed to be inevitable, but the Japanese economy has not generated even 3 percent growth in any year since 1990 (except for 2010). Since their approach to monetary and fiscal policy has mirrored our own, the outlook is unlikely to suggest that the recovery will occur in 2013 or 2014," it said.
Mason said even if taxes are increased but the increases are permanent, that would help the economy.
"The businesses won't like it, but at least it's something they can plan on," he said.
The outlook for the Jacksonville area economy seems to mirror the national outlook, but the local economy did outperform the nation in some areas during the third quarter, according to LEIPLINE.
Consumer prices jumped at a 7 percent annual rate in August and September nationally, due to higher gasoline prices and the impact of the drought in much of the country on food prices. However, inflation was not as bad in the Jacksonville area.
"Part of the reason was the slowing of housing re-sales in both quantities and prices during those two months, locally," LEIPLINE said.
"The (inflation) outlook for the fourth quarter of 2012, as it routinely does, will depend on the amount of discounting that retailers need to engage in and the stability of oil prices. We are hopeful that the Christmas season will be strong from a growth standpoint which will generate the side effects of escalation in prices," it said.
While housing re-sales slowed, there was a big jump in building permits in August and September. That left the leading economic indicators for the Jacksonville area positive overall but the index has been bumpy, with two positive and two negative months over the last four months, LEIPLINE said.
The Jacksonville area unemployment rate fell to a seasonally adjusted 7.93 percent in October, the first time the rate has been below 8 percent this year.
"This appears to be good news, but it must be viewed with caution in lieu of the decline in the workforce in October that virtually matched the decline in unemployment and the sizable increase in new claims for unemployment insurance in October," LEIPLINE said.
"Continued expansion at the port and the development at Cecil Field (finally) will help quell the tide of worsening employment, but the picture is not rosy despite the improving housing market. This is particularly true for college graduates and teenagers," it said.
LEIP's indexes of local stocks outperformed the national market in the third quarter and into October.
"Our local stocks underperformed the entire market for the three years preceding the second quarter, so it was a welcome change that revealed itself from April through October," LEIPLINE said.
"The local economy outperforming the national averages in housing, unemployment and stock prices is a good sign, but the uncertainties in Europe, China and in business investment present difficulties in being entirely optimistic. Inasmuch as the Great Recession was the longest and deepest recession since 1979-81, it is not surprising that the recovery has been so slow and fitful," the newsletter said.
"Major improvements in flow through the port, increased employment in both the private sector (particularly financial services) and most importantly, improved business confidence would go a long way in generating improved indicators that become definitive in the positive direction," it said.
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