You’ve probably heard a lot of gloom and doom about the national economy in the past few days after the lackluster report on May’s employment numbers.
Don’t despair. According to the University of North Florida’s Local Economic Indicators Project, or LEIP, first-quarter data for the Jacksonville area show that the economy is looking up.
There are some risks that could affect the outlook, including uncertainty over the European economy, but data for Jacksonville are looking better than they have in a long time, the organization said in its quarterly LEIPLINE newsletter.
“Since the first LEIPLINE came out in early 2007, and the Great Recession started less than a year later, there has not been much evidence to recommend optimism during the LEIPLINE run,” it said.
“However, with the caveats already emphasized regarding the European issues withstanding, we are more optimistic about the local economy than we have been for quite some time. Hopefully that optimism is not misplaced,” the newsletter said.
One major positive sign is a drop in the unemployment rate in the Jacksonville metropolitan area to a seasonally adjusted 8.1 percent in April, matching the national jobless rate.
LEIP, which has been collecting data on the local economy for a decade, said that was the first time Jacksonville’s unemployment rate was close to falling below the national rate since May 2008.
“Before the Great Recession, Jacksonville’s economic strength was always above that of the nation as a whole,” said UNF economist Paul Mason, who runs LEIP.
Mason said he was not concerned about Friday’s report from the U.S. Labor Department that showed an uptick in the national unemployment rate to 8.2 percent in May.
“The media always overreact to these numbers,” he said. However, he added, “if it continues to keep going up, that’s a problem.”
The May unemployment data for Jacksonville will not be available until the end of next week.
The LEIPLINE newsletter said to expect continued declines in unemployment in the Jacksonville area in the second quarter because private sector job advertising is increasing.
“However, given the employment distribution in Jacksonville, and the dominance in that spectrum of the school districts, universities, and the remainder of the public sector, continued workforce reductions in state and local government workers can offset the benefits in the private sector,” it said.
Among other data collected by LEIP, the consumer price index for the Jacksonville area showed flat growth in prices. The outlook for the second quarter might be affected by the European debt crisis and election year politics, it said.
LEIP’s index of leading economic indicators for the area rose in the first quarter, with sharp gains in January and March.
“While local stocks rode the growth of the stock markets as a whole, an unexpected boost came from building permits that were up from the mediocre 200-per-month levels throughout most of the last four years to over 600 in March. Initial estimates suggest that April saw sizable building permits as well,” LEIPLINE said.
The report also noted that consumer confidence still is not very strong, but has improved some this year.
LEIP said it is hopeful that the leading indicators will continue to point toward growth in the local economy.
“At this point, as has been the case for all of the LEIP time period, housing growth and recovery is the primary driver of the LEI (leading economic index) and most macroeconomic variables,” the newsletter said.
“If housing has returned to some level of normalcy, the LEI may start rising more consistently and the outlook will improve as a result,” it said.
Mason said that uncertainty about the upcoming presidential election is affecting the economy.
Businesses have questions about the direction of government policies on issues such as health care and taxes.
“Firms locally and nationally are still reluctant to expand capacity given the political and global uncertainty, and growth of output and employment is suffering as a result,” LEIPLINE said.
The newsletter said that the Federal Reserve Bank of Atlanta’s May questionnaire about local economic conditions mainly asked about business investment, so that’s a concern on a national level.
“There’s an awful lot of uncertainty out there,” Mason said.
Many of these business concerns likely won’t be resolved until after the November election.
Even though there are risks to the outlook, Mason looks forward to better economic times in Jacksonville.
“I’m optimistic that things are getting better here faster than the nation as a whole,” he said.
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