University of North Florida economist Paul Mason admits he leans toward pessimism, so it is noteworthy that he has a brighter outlook these days on conditions in Northeast Florida.
The latest issue of the quarterly LEIPLINE newsletter from UNF's Local Economic Indicators Project said that both local and national indicators are "beginning to move more rapidly positive," based on first-quarter data.
"To warm the hearts of Jacksonville area residents and business people, this trend appears to be stronger locally than nationally," it said.
"I'm hopeful that this is the beginning of better news," said Mason, who coordinates LEIP, and that should make everyone happy.
"It's not my nature to be optimistic," he said.
Improvements in the housing markets are the "brightest lights" in the economic outlook, LEIPLINE said.
"Real estate drove the U.S. economy from 2002-2006, but of course it ended with a burst bubble. Some forward-thinking individuals are already concerned about a repeat performance due to extensive investments by hedge funds and other financial entities in residential real estate," it said.
"However, as long as the mortgage industry maintains (or is forced to comply with) constraints on down payments and credit worthiness, then the market forces should work this time," it said.
Mason said there are other factors affecting the positive outlook, including evidence that banks are lending more and that business expenditures are up.
"The optimism comes from the housing market but it's not entirely that," he said.
LEIP compiles monthly data about four indicators for the Jacksonville metropolitan area: consumer prices, unemployment, stock prices and leading economic indicators.
Its consumer price index for Jacksonville is "the most significant variable that we analyze," LEIPLINE said, and a jump in the CPI is good news for the economy.
"While inflation eats away at the purchasing power of one's income, it also generally signals a strengthening economy," it said.
When the economy is weak, businesses don't have the leverage to raise prices but when consumers are willing to spend, prices rise.
LEIPLINE said inflation was much higher in the Jacksonville area than the rest of the country in recent months. Through the first four months of the year, the national CPI rose at just a 0.28 percent annual rate, but Jacksonville's CPI rose at a 3.4 percent rate.
"While both the national and local numbers revealed similar swings associated with first escalating then falling oil prices (which started to rise again in May), the Jacksonville housing market has improved far more than the nation as a whole in the last four months (particularly in April)," LEIPLINE said.
Among other categories, apparel prices were volatile in the first quarter but automobile prices were stable, it said.
"The outlook for the second quarter of 2013 in terms of local inflation is more rising prices as the Jacksonville economy continues to strengthen," LEIPLINE said.
"As we move toward the summer months and the spring shopping and beach seasons affect consumer purchases, look for prices locally to continue to rise in food, apparel, transportation, and energy," it said.
"Whether the rate of inflation continues to accelerate, or moderates to more normal levels, will depend on how willing consumers are to translate improved confidence into expenditures," it said.
LEIPLINE said the increase in inflation has been accompanied by a drop in unemployment.
"Just as inflation is rising faster locally than nationally, unemployment is falling faster as well," it said.
"The outlook for the second quarter of 2013 for unemployment looks strong. As we approach the season when college and high school students get out for the summer and look for temporary employment, the help-wanted signs are materializing," LEIPLINE said.
"Builders are lamenting the lack of availability of skilled construction labor and after five years of diminished hiring of college graduates, that market has turned around in several sectors locally as well," it said.
"We perceive that the downward trend in unemployment locally will continue to be sufficiently sizable to override the seasonal influences of the swelling labor force in the summer. We are not projecting a decline (in the jobless rate) below 6 percent any time soon, but the low 6 percent range seems reasonable," it said.
LEIP's index of local stocks outperformed the Dow Jones industrial average for the fourth quarter in a row in the first quarter this year.
"Our local stocks underperformed the entire market for the three years preceding the most recent time period, so it was a welcome change that revealed itself. This too is an indicator that Jacksonville is back to outperforming the U.S. economy as a whole," LEIPLINE said.
LEIP's index of leading indicators was "pretty flat" in the first quarter but was more positive in April.
"Hopefully, the LEI in the second quarter of 2013 will reveal positive momentum for the entire quarter for the first time in a long time," LEIPLINE said.
Putting it all together, LEIPLINE said the Jacksonville area economy did seem to begin an upswing in the first quarter.
"With prices rising, particularly in housing; unemployment falling at significantly faster rates than elsewhere; the LEI on the positive side; and local stocks outperforming the Dow, Jacksonville is in a stronger position than it has been in quite some time," LEIPLINE said.
"Let's hope that the momentum continues into the second quarter of 2013 and well beyond," it said.
(904) 356-2466