Jacksonville economic indicators lag behind rest of the nation

National economic indicators are pointing to a pickup in growth after the holidays, but local indicators show that Jacksonville may continue to lag behind the rest of the country.

The Conference Board, a New York research firm, said Thursday that its Leading Economic Index for the U.S. rose by 0.5 percent for the second straight month in October. That’s the fourth straight rise in the index that is designed to predict economic conditions several months ahead.

But the University of North Florida’s Local Economic Indicators Project (LEIP) reported that its leading index for the Jacksonville area fell by 0.31 points last month to 103.66, reversing a 0.80-point rise in September. That continues an up-and-down trend for the Jacksonville index that has risen five times and dropped five times in the first 10 months of the year.

The report on economic indicators follows another LEIP report Wednesday that its Consumer Price Index for the Jacksonville area fell in October for the seventh time this year, showing that businesses are keeping prices down because of weak consumer demand.

“The combination of our negative LEI and CPI values in October locally is not good news. The local area continues to lag the national recovery,” UNF economist Paul Mason said.

One negative trend in the Jacksonville area was a 400 person increase in new applications for unemployment insurance in October, after three straight monthly declines in new unemployment claims.

Nationally, the Conference Board said its index of coincident indicators, which measures current economic activity, rose 0.1 percent in October after being unchanged in August and September. However, the research group said the October leading indicators suggest that the slow growth may start to speed up.
The research group said the October leading indicators suggest that the slow growth may start to speed up.

“Expect modest holiday sales, driven by steep discounting. But following a post-holiday lull, the indicators are suggesting a mild pickup this spring,” Conference Board economist Ken Goldstein said in a news release.

Florida Times Union - November 18, 2010
http://jacksonville.com/business/2010-11-18/story/jacksonville-economic-indicators-lag-behind-rest-nation

Scott's "7-step plan" creates 700,000 jobs in 7 years

Governor Elect Rick Scott's plan for getting Floridian's back to work

1. Implement Accountability Budgeting

• Transparent, outcome-based budgets
• Biennial budgets that will allow an adequate review of the budget’s goals and give the public time to participate in the budget process
• Spending limits that ensure affordable government expenditures levels AND focus on economic growth not government spending
• Return Florida’s state and local government expenditure burden to at least the 2004 level
• Refuse temporary funding from the federal government that creates permanent spending

2. Reduce Government Spending
Balance the budget – without one-time revenues, borrowed funds, temporary funds, or tax increases.
Implement outcome-based budgeting to create budgeting efficiency throughout government, including:

• Align pension reform with state employee pension contributions in other states to save almost $1.4 billion. Currently Florida workers do not contribute towards their retirement.
• Pay competitive market-based salaries for corrections’ staff, use inmate labor to grow prison food, and competitively bid health care contracts to reduce prisoner costs by $1 billion.
• Impose more stringent standards on non-compliance with work requirements and require drug screening for welfare recipients. This could save Florida $77 million.
• Use common sense business solutions to reduce the cost of government through operational efficiency saving upwards of $500 million (per Florida Taxwatch). Reduce state workforce by 5 percent to save almost $300 million.
• Reform health care for Medicaid recipients (through a waiver) and state employees (consumer directed care) to save taxpayers’ $1.8 billion.
• Veto Pork Barrel Spending and unnecessary pork barrel projects.

3. Enact Regulatory Reform

• More affordable unemployment benefits
• Implement tort reform to limit frivolous lawsuits
• Impose a regulatory freeze and implement a comprehensive review of existing and proposed regulations
• Review state development regulations and expedite permits for job-creating businesses, such as Enterprise Florida’s targeted industries
• Reform Pubic Service Commission (PSC) processes to allow reasonable energy production and expansion
• Lower workers’ compensation costs - a 35% reduction in costs would save businesses about $2.46 billion
• Bring health insurance costs and mandates in line with the U.S. average
• Address Florida’s relatively expensive electricity costs to save businesses approximately $3.25 billion

4. Focus on Job Growth and Retention

• Ensure local economic development offices have the right resources and trained specialists to assist their local businesses with obtaining state and federal grants and complying with state and local regulatory processes
• Eliminate overlapping economic development agencies, and have one group serve as the statewide recruitment agency to assist local economic development agencies.
• As governor serve as the state’s chief economic development officer, working with existing as well as potential businesses every day to create jobs
• Make economic development programs more flexible to allow existing businesses to expand in their own unique ways and invest in the state Innovation Fund that brought Scripps and Burnham research labs to Florida.
• Nurture cutting-edge technology clusters – such as the biotechnology cluster in Orlando that creates over $7 in economic returns from every $1 invested.

5. Invest in World Class State Universities

• Invest in university research, laboratories, business incubators, and technology transfer
• Connecting the research conducted by each of Florida’s university to the state’s economic development process
• Leverage the research strengths of the state’s universities to invest in new and emerging technologies
• State economic development grants will always include partnerships with universities to develop research strengths into unique clusters, such as biotechnology

6. Reduce Property Taxes

• Reduce the statewide property tax (RLE) by $1.4 billion (from 5.29 mills to 4.29 mills, a 19% reduction in RLE).

7. Phase out the Business Income Tax

• Total state tax revenues will benefit from the dynamic economic growth created from the corporate income tax phase-out

More details about the 7-7-7 plan can be found at http://www.rickscottforflorida.com/home/turn-florida-around/

St. Pete Time PolitiFact.com says Scott's job plan promises are mostly true.
The Ledger.com says Scott's Plan may not pan out.

Regional resilience: Bouncing back from disaster - economic, natural, and social

Regions able to bounce back from, adapt positively to, or withstand negative, external shocks that throw a metro area off course are regionally resillient and have the following characteristics.

Strong and diverse regional economy: A diversity of major “export” industries, low reliance on durable goods manufacturing, and a relatively small gap between the incomes of high- and low-income residents help a region withstand or avoid negative economic shocks.

Large shares of skilled and educated workers: Workers with skills and higher levels of formal education have greater capacity to learn new skills and adapt to the changing needs of an economy. Regions with high percentages of highly-educated people are better able to withstand or avoid negative economic shocks.

Wealth: A community with funds, whether government, private, philanthropic, or individual, can help provide adaptive cushion and resources to invest in rebuilding, reconstruction, reforms, and needed capacities.

Strong social capital: A community with strong attachment to place, strong citizen participation and community engagement, and social cohesion between groups and individuals is more resilient.

Community competence: The ability of a community to solve problems, identify creative solutions, have nimble policies and institutions, and build strong political partnerships can all be critical tools to help a metro area adapt to and rebound well from a shock.

Thriving after the (economic, social, and natural) disaster after the storm in the seven-county, Post Katrina, Post Oil Spill, Post Recession New Orleans region means building a more prosperous community as defined by the following goals.

• Quality economic growth that boosts productivity, spurs innovation and entrepreneurship, and generates quality jobs and rising incomes;
• Inclusive growth that expands educational and employment opportunities, reduces poverty, and fosters a strong and diverse middle class;
• Sustainable growth that conserves natural resources, maintains environmental quality, and increases the safety of the area; and
• High quality of life for residents and businesses that often includes a package of strong amenities and quality public services, like good schools and safe streets.

Do these or similar goals seem make sense for the Jacksonville Region?

 Selected key actions for a more resilient New Orleans that may apply to the Jacksonville Region.

Responding to the BP Oil Spill and the Great Recession

• Diversify and strengthen the key regional “export” sectors of the economy. Tap into the area’s expertise in energy and higher education research capacity on renewable energy; challenge and encourage the growing network of entrepreneurs to identify bold, sustainable business ideas that strengthen core industries; and accelerate the transition to innovation-fueled, knowledge-based industries.
• Expand international export capacity to help grow existing industries and the number of good-paying jobs. Invest in innovation in key industry clusters to increase the quality of the goods and services produced in the region for sale to other regions and abroad; modernize the port and multimodal freight strategy to help move a greater volume of goods; or help small and mid-sized businesses reach global customers.
• Empower the area’s many institutions of higher education to help retrain and improve the quality of the workforce for growing sectors of the economy. The relatively high share of workers with low education levels and skills may be holding back the transition to more robust and knowledge-based industries and hindering workers’ pathways to wealth-creating opportunities.

Strengthening assets and capacities for greater regional resilience via community engagement

• Continue to nurture an “open society” where engagement, networks, partnerships, and collaboration continue organically
• Maintain citizen participation as the community transitions from “crisis” to the mundane task of implementation
• Expand local “wealth” (e.g., tax base, private investment, philanthropy, individual) to match outside resources and sustain a level of self-reliance
• Diversify and strengthen the economy’s export sectors and increase the share of its skilled and educated workers

Ultimately success depends on political, civic, business, and community leaders who identify a set of common goals, priorities, and strategies to set the region on a future course that leads to meaningful outcomes.

What can the Jacksonville Region learn from New Orleans’ seven-county region?

Read more at https://gnocdc.s3.amazonaws.com/NOIat5/Overview.pdf  An overview of Greater New Orleans: FROM Recovery to Transformation by Amy Liu and Allison Plyer of the Brookings Institute

Recession to recovery more likely in a previously expanding local economy

As of August 2010, according to Moody’s Analytics Adversity Index, the Jacksonville Metropolitan Statistical Area (MSA) was “At risk” for continued recession. The Index measures employment, single family housing starts, housing prices, and industrial production. Take a look at these Jacksonville MSA numbers.

8.2010 (“At Risk): Employment (-0.31%) | Single family housing starts (-0.67%) | Housing prices (N/A) | Industrial production (+5.22%)

So what did the Jacksonville MSA look like a year ago?

8.2009 (“Recession”): Employment (-6.17%) | Single family housing starts (+35.82%) | Housing prices (-7.95%) | Industrial production (-9.97%)

What about 2 years ago in the Jacksonville MSA?

8.2008 (“Recession”): Employment (-2.16%) | Single family housing starts (-31.79%) | Housing prices (-10.78%) | Industrial production (-2.08%)

Jacksonville MSA Strengths
-Military base underpinning strong demographic trends.
-Growth drivers in tourism and port.
-Low-cost center for financial services.
-Competitive living costs.

Jacksonville MSA Weaknesses
-Below-average incomes.
-Reliance on federal defense spending.
-Very susceptible to downturns in the business cycle.

In August 2008 there were seven states considered “In Recovery” – Montana, Colorado, New Mexico, Texas, Alaska, Massachusetts, and New Hampshire. These states were still considered “In Recovery” as of August 2010.

How have some of the large metro areas in these states fared since 2008?

Austin, Texas MSA
8.2010 (“Recovery”): Employment (+2.06%) | Single family housing starts (-24.36%) | Housing prices (N/A) | Industrial production (+9.17%)
8.2009 (“Recovery”): Employment (-2.75%) | Single family housing starts (-0.39%) | Housing prices (-0.39%) | Industrial production (-10.49%)
8.2008 (“Expansion”): Employment (+2.22%) | Single family housing starts (-38.32%) | Housing prices +3.73%) | Industrial production (+5.32%)

Austin MSA Strengths
-Strong population growth supports demographically driven consumer demand.
-Well-educated labor force attracts high value-added tech businesses.

Austin MSA Weaknesses
-Competitive pressure of foreign high-tech manufacturing challenges local industry.
-Tech cycle adds to cyclical volatility of overall local economy.

Denver, Colorado MSA
8.2010 (“Recovery”): Employment (-1.00%) | Single family housing starts (+10.9%) | Housing prices (N/A) | Industrial production (+5.74%)
8.2009 (“Recession”): Employment (-5.06%) | Single family housing starts (-34.08%) | Housing prices (-0.66%) | Industrial production (-8.98%)
8.2008 (“Expansion”): Employment (+1.05%) | Single family housing starts (-48.01%) | Housing prices (-0.52%) | Industrial production (-2.21%)

Denver MSA Strengths
-High concentration of high-tech industries and skilled workers.
-Per capita income is well above the national average.
-Strong demographic trends.
-Credit quality has held up well during the recession.

Denver MSA Weaknesses
-High dependence on volatile industries.
-Fiscal conditions are deteriorating

Boston, Massachusetts MSA
8.2010 (“Recovery”): Employment (+1.3%) | Single family housing starts (-3.12%) | Housing prices (N/A) | Industrial production (+7.1%)
8.2009 (“Recession”): Employment (-4.15%) | Single family housing starts (-12.73%) | Housing prices (-3.53%) | Industrial production (-9.44%)
8.2008 (“Expansion”): Employment (+0.4%) | Single family housing starts (-33.6%) | Housing prices (-4.47%) | Industrial production (-0.38%)

Boston MSA Strengths
-Business capital of New England.
-Access to skilled labor force and venture capital for emerging companies.
-Dynamic high-tech and biomedical research and development industries.

Boston MSA Weaknesses
-Very high business and living costs.
-Weak population growth.
-Highly exposed to cyclical financial and tech industries.

Note: The employment, housing, and industrial figures above are three month averages.
For more information about the Moody Adversity Index: http://www.msnbc.msn.com/id/29866676

Recession Recovery? Innovation, People, and Place Matter

A FEW KEY QUOTES: New Ways of Living and Working Will Drive Post - Crash Prosperity – with Richard Florida, Author ‘The Rise of the Creative Class’

“Economies and societies invariably remake themselves in the wake of a crisis. It’s a necessary component of rebound and recovery.”

“…place and geography has a significant impact on economic systems. With this Great Reset (The Recession of 2008-09), we will see an even greater emphasis on place – more specifically the rise of the mega region, which are new and incredibly powerful economic units. No longer will we focus on the city versus suburb but on how to increase our connection to our respective mega regions.”

“The First Reset (1870) saw power and communication grids and streetcar and subway systems spread across the country, speeding the movement of goods, people, and ideas. The Second Reset (1930) brought huge developments in media, mass-produced consumer goods, and the role of large corporations, when companies like IBM rose to prominence and when what was good for General Motors was good for the nation.” [Note: The Resets of 1870 and 1930 are references to the Panic of 1873 and the Great Depression.]

“Most importantly, cities have to recognize that in times of crisis they have to help themselves. Governments, no matter how well intentioned, can only do so much, especially when they themselves are so strapped for cash…Every city has hidden seeds of opportunity waiting to be nurtured.”

(About the Sunbelt) “The boom in housing and the influx of population generated a thriving retail and service economy, but there were no economic drivers underpinning it all. There was nothing to generate new capital, only the capital that people were bringing with them. When that bubble burst, there was nothing to fill the gap. The potential solutions in the Sunbelt aren’t much different from those in the Rust- Belt: Build on real underlying economic strengths and tap into the creative core in the existing population and its valuable human capital.”

“For the first time in human history, the basic logic of our economy dictates that further economic development requires the further development and use of human creative capabilities. The great challenge of our time is to find ways to tap into every human’s creativity”

“Places like Detroit, Cleveland, and Pittsburgh are among my favorite cities. They have great universities, clusters of innovation across a range of industries, and pools of innovative and creative talent to build on. They need to stop their penchant for megaprojects like new stadiums…and stop depending on federal bailouts. They need to understand that rebuilding takes a generation or two – it will not happen overnight – and that it has to come from building upon local strengths and capabilities organically.”

“Transportation systems that are fast and efficient and environmentally clean are going to enable the formation of these new mega-regions…We need to be able to accelerate the movement of people, goods, and services – the very movement of ideas, knowledge, and creativity – between our major population centers.”

Read Bob Morris' complete interview about The Great Reset with Richard Florida on the Wall Street Cheat Sheet http://bit.ly/thegreatresetwsj

Regional assets: Northeast Florida, success to build on

Active Market Sectors
Financial: German-based Deutsche Bank, which commenced operations in Jacksonville in 2008, hired an additional 250 employees in 2010 — another step toward meeting its commitment to create a total of 1,000 jobs for the region. In addition, Maitland-based Digital Risk has announced plans to open a service center in Jacksonville and hire a minimum of 175 employees. The company monitors and manages loan portfolios and detects loan fraud, reviewing approximately 14,000 loans per month.

Energy: InEnTec Chemical moved its corporate headquarters from Bend, Ore., to Clay County in 2010. The company's manufacturing facilities convert both hazardous and non-hazardous commercial, medical and industrial waste materials into clean, renewable energy products such as ethanol, methanol, syngas and hydrogen with minimal environmental impacts and low costs. InEnTec officials note that the Northeast region offered the perfect location to tap into the scientific expertise available at Florida's leading research universities as well as an ever-growing clean technology talent pool.

Aviation/aerospace: Aviation Systems Engineering has added 10 high-paying jobs to its Jacksonville branch office. The company specializes in aviation system development and analyses and has contracts with the U.S. Department of Defense. AvMax Group is opening a heavy maintenance and modification facility to serve the region's jet and turboprop aviation industry at Jacksonville International Airport. The facility will initially employ as many as 100 to 120 licensed aircraft mechanics.

Healthcare: Northeast Florida's already strong healthcare economic engine continues to surge forward. Hospital giant Health Care Association of America (HCA) is building a new $130-million hospital near Cecil Commerce Center, and Baptist Medical Center is adding a $200-million, 11-story tower to its existing campus.

World-renowned Mayo Clinic Jacksonville has so many international patients that it has established an office dedicated to meeting their special needs. Nine full-time staff members assist patients and families by scheduling appointments; translating medical documents; and providing concierge services for travel arrangements to and from Jacksonville and around the metropolitan area once they arrive.

International Business
Thanks to Florida's location at the center of the Western Hemisphere, trade with countries in the Caribbean and in Central and South America has become practically seamless. In recent months, Cornerstone inked a deal to promote business opportunities with Ireland and is currently working with the group Atlantic Way Region.

In addition to Saft America, other companies with foreign investment interests that are thriving in Northeast Florida include:

• Mercedes Benz USA, which has opened a 400,000-square-foot parts distribution center at Jacksonville International Tradeport. The venture represents a $26-million capital investment for Mercedes Benz.
• Hanjin Shipping Company of Seoul, Korea, which is building a 90-acre container facility at the Dames Point Marine Terminal at the Port of Jacksonville. Hanjin joins Tokyo-based Mitsui OSK Lines (MOL), which opened its TraPac Container facility at JAXPORT in 2009.

Affordability
Florida's Northeast region remains one of the state's most affordable places to live. According to research data compiled by the National Association of Realtors for the first quarter of 2010, the median sale price for existing single-family homes in the Jacksonville Metropolitan Statistical Area was $144,900. The median sale price during the same period for condominiums and cooperatives was $79,700.

Jacksonville Electric Authority (JEA), one of the nation's largest municipal utilities and the largest community-owned utility in Florida, is this region's primary provider of electricity, water and wastewater service. Serving most of Duval County as well as portions of Nassau, St. Johns and Clay counties, JEA boasts some of the lowest rates in Florida.

Source: Business Florida 2011 - The Regions. Northeast - Connecting to the World. Northeast Florida offers international companies the right mix of amenities and global connections. http://www.floridatrend.com/biz_fl_article.asp?page=1&aID=53633

Northeast Florida's regional assets: Saft America Inc.

Peter Denoncourt says there wasn't one particular thing that stood out about Northeast Florida when Saft America Inc. went looking for a new location to build a manufacturing plant for its lithium-ion batteries; it was a combination of factors that made this seven-county region attractive.

Two-thirds of the 50 million people living in the southeastern United States are within 600 miles of this region, which is home to more than 80 corporate, regional and divisional business headquarters; a combination of quiet neighborhoods and bustling urban centers; miles of pristine Atlantic coastline; and a wealth of cultural and recreational opportunities, not to mention America's oldest city — St. Augustine. And with three interstate highways, three major rail lines, two deepwater ports and four marine terminals, Northeast Florida offers some of the best transportation options available.

Since Saft America plans on using its new factory as a "showcase" to both domestic and international clients interested in alternative energy sources, convenience played heavily into the site decision. Jacksonville International Airport, with 200 arrivals and departures daily, provides easy access to the factory, which is located at nearby Cecil Commerce Center North.

Saft America Inc. already has five manufacturing plants in the southeastern U.S., mostly in rural areas. However, for this new 235,000-square-foot factory for the production of lithium-ion batteries, the company required a more sophisticated site and Jacksonville seemed the perfect fit, says Denoncourt. "This city has more of an international feel."

"We expect to do a lot of work,'' Denoncourt says, noting that at full capacity, the Jacksonville facility will produce an estimated $300 million worth of batteries annually. To meet demand, Saft is expected to hire as many as 280 workers at salaries that are approximately 15% above the average statewide wage. Many of the hires, Denoncourt adds, will likely be drawn from the region's plentiful pool of former military employees.

More Regional Assets
Universities/Colleges: Edward Waters College, Flagler College, Florida State College at Jacksonville, Jacksonville State University, St. Johns River Community College, and the University of North Florida
Airports: Jacksonville International Airport and Northeast Florida Regional Airport at St. Augustine
Seaports: Port of Fernandina and Port of Jacksonville
Spaceport: Cecil Field Spaceport

Source: Business Florida 2011 - The Regions. Northeast-Connecting to the World. Northeast Florida offers international companies the right mix of amenities and global connections. http://www.floridatrend.com/biz_fl_article.asp?page=1&aID=53633