Economic Outlook May 20 2010

Dr. Robert D. Cruz, Chief Economist Miami-Dade County May 20 20, 2010 www.miamidade.gov/eap /

cruzr1@miamidade.gov 1

Agenda • Miami-Dade ’s economy: y a look at basic indicators for context.

• Quick Q i k review i off recent past and d current short term trends.

• A closer look at key short term indicators.

• Focus on the local housing market • What Wh t we might i ht expectt in i th the second dh half lf of 2010 and into 2011 2

A Brief Comparative Look at MiamiDade ’s Economy in the Context of the h State and d Tri-County Region

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Miami-Dade ’ Miami Dade s GDP (2008) • Miami Miami-Dade ’ Dade s Gross

Domestic (Regional) Product: $111 $111.5 5 Billion • Miami/Ft.Lauderdale/ Miami/Ft Lauderdale/ Pompano metro area GDP: $261.3 $261 3 Billion • Florida GDP: $744.1 Billion Billi

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Economic Growth Comparison

Source: U.S. Bureau of Economic Analysis; REMI, Inc.; and Office of Econ. Dev. Coordination

• Miami-Dade ’s economic growth held up better than

th St the State t d during i thi this recession. i 5

Labor Market Performance

• Miami-Dade ’s ability to maintain employment held up

better than the State duringg this recession. Countyy enters recession later and coming out of the recession sooner.

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Miami-Dade Miami Dade Consumer Market Indicators • Population: 2.4 million • 26% of population in the 15 –34 year old demographic • 15% of population 65 or older • 28% of population older than 24 have 4-yr college g or higher g (77% ( at least high g school graduates) g ) degree

• Households: 826,000 (563,000 family households) • Median family income: $51,700 $51 700 (34% with $75K or above); Average family income – $74,600 • Average wage: $44,000 $44 000 • Total Household Income: $66 Billion, Miami-Dade 7

Tri County Household Income Tri-County Income, 2008

Source: U.S. Census Bureau, American Community Survey, 2008 8

Broad indicators suggest MDC has a resilient economy and represents an attractive market • A quick look at basic economic indicators suggests Miami-Dade ’s economy produces a large amount of economic output (15% of State GDP).

• The County ’s economy is larger than the economy of anyy other in Florida.

• Miami-Dade withstood the recession better than the state as a whole, whole and any other large metropolitan area in the state.

• The initial phase of economic recovery is underway in the County, yet the future path of that recovery is remains uncertain uncertain.

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Quick review of recent past and current short term trends and closer l llookk on kkey iindicators. di

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Recent Developments p • Payroll employment in the private sector, on a seasonally adjusted basis basis, shows positive trend since December.

• Employment flat in 4th Qtr ‘09 09 and up in 1st Qtr ‘10 10 • Likely gains in labor productivity suggest County GDP grew in each of the last two quarters.

• The number of Miami-Dade residents with jobs has been rising (seasonally adjusted basis) since August.

• Unemployment rates have been rising, however, because previously “discouraged workers ” are coming b k iinto back t th the llabor b market. k t • Other local economic indicators providing encouraging signs. signs 11

Payroll Employment • Average payrollll jobs in last 3 months of 2009 = 820 000 820,000; • Average payroll jobs in first 3 months h off 2010 = 824,000; • Annualized Q/Q growth rate = 1.9%

Note: Payroll employment refers to persons working in Miami-Dade regardless of their place of residents.

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Residents with Jobs • 10,000 more residents in March 2010 held h ld jobs b than h in March 2009.

• March a c marked a ed tthee 7th month of employment gains and the 2nd consecutive month with year-over-year employment gains. gains • That has not happened at the State level yet, nor in any other large Florida urban area.

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Taxable Sales

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Tourism

Recent gains coinciding with improving U.S. economy, and relatively strong economies in major points of origins for international tourism tourism.

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Aviation and Maritime Transport p

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Aviation and Maritime Transport p

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Aviation and Maritime Transport p

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Focus on the local housing market

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Housingg Market Drivers • REO foreclosure activityy resultingg in abundant supply, eager sellers, and lower prices. prices • Price correction;; better alignment g with typical family income in the County.

• Low interest rates and gradually increasing availability of credit.

• Generous federal tax incentives.

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Housingg Market

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What to expect p for balance of 2010 • U.S. economic recovery to continue into the 2nd half off 2010 2010, with ith steady t d gains i and d an acceleration l ti off employment growth. (High probability scenario.)

• Inflation I fl ti remains i very much h under d control, t l and dU U.S. S interest rates to remain relatively low through Oct. • If employment l t growth th accelerates l t ttoo quickly i kl and d commodity prices (oil, metals, materials) begin to rise too fast fast, then expect FED to act to raise interest rates and tighten credit. (Low probability scenario.)

• If employment growth does not pick up soon and housing market shows clear signs of faltering in June, p another round of home buyer y tax credits,, then expect and temporary stimulus tax cuts.

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Economic Risk in 2011 • Investors in global financial markets remain nervous – supporting ti significant i ifi t market k t volatility. l tilit • Sovereign debt default risk in Greece and other small Euro zone countries and fear of “contagion ” contagion keeping financial markets on edge.

• China China ’s accelerating inflation raising concern that it will have to take abrupt actions to slow its economy with adverse effects on global economic growth.

• Avoiding a Euro zone credit crisis and severe slowdown in China are keys to maintaining/accelerating U.S. economic recovery into 2011.

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