11/22/2011
Exploring trade connections between Europe and the Southeast
Thanksgiving. What a great holiday. Family, friends, turkey, stuffing, apple pie (not a big pumpkin pie fan). And perhaps, if we are true to the spirit of the holiday, a time to pause and remember all there is to be thankful for. My list contains the usual suspects—wife, kids, parents, friends, and others that no doubt would be on your list as well. One item that's on my list that would surprise me to find on yours would be Europe.
There's a little more to it than just "Europe." In 1985, my parents sent me to study in Europe for my junior year of college. Miami University (the one in Ohio) has a small campus in the Grand Duchy of Luxembourg, and I studied there from September to May of 1986. I still don't know how my parents did it on their wages—but they did, and I'm ever thankful because my year in Europe did as much to mold me as any other experience.
Of course today, not many people are feeling particularly thankful for the European debt situation, which is causing much-discussed pain and uncertainty in the global economy. It's a topic that's been on Atlanta Fed President Dennis Lockhart's mind. He shared this concern last month in a speech in Chattanooga, Tenn., when he noted that the U.S. fiscal situation and "financial instability from developments in Europe" were the most significant risk factors facing the U.S. economic outlook. As more news has come out of Europe in the weeks since then, many have discussed the risk of possible financial contagion from the situation there spreading "across the pond" to the United States.
Federal Reserve Vice Chair Janet Yellen mentioned the issue in her November 11 speech in Chicago:
"We are monitoring European developments very closely, and we will continue to do all that we can to mitigate the consequence of any adverse developments abroad on the U.S. financial system."
Fed Chairman Ben Bernanke offered some thoughts about the European situation in response to a question at his press conference following the FOMC meeting on November 2:
"...what we can do, really, is only a couple of things. One is that we can look at our own financial institutions and try to assess the exposures and the linkages between our institutions and those in Europe and the sovereign debt in Europe, and we've been doing that on a consistent basis. We've looked also, of course, with other regulators at money market mutual funds and other types of financial institutions that have connections to Europe...
"And the other thing that we can do is stand ready, if necessary, to provide whatever support the broader economy needs and the financial system needs, should things worsen. I mean, we are hopeful that the latest measures, vigorously implemented, will indeed ultimately reduce these stresses, but in the case that things do get worse, both monetary policy and our policies of lender of last resort are available to insulate the U.S. economy from the effects."
The other channel where problems in Europe can affect the United States is through international trade. The members of the European Union have accounted for roughly 20 percent of U.S. exports over the last decade. Thus, any slowdown or decline in economic activity in Europe would most likely lead to a decline in demand for U.S. goods there, which in turn would lead to a decline in U.S. exports to Europe.
How would such developments affect the Southeast? Over the past decade, the states of the Sixth District have shipped an average of nearly $22 billion worth of goods per year to the European Union member countries. The dollar value of these goods accounts for almost 19 percent of total exports from the six states in the region—a number similar to the United States as a whole.
The importance of Europe as an export market varies by state, as the table below shows. Complete data are available through 2009, but by using the 10-year average we can see the longer-term pattern.
Based on these figures, Florida ships the most goods in terms of value to Europe, but Alabama is more dependent on exports to Europe than any other state in the region. Georgia also sends a significant portion of its total exports to Europe. While there is concern about the financial impact of instability in Europe, a souring of economic activity across the Atlantic would also affect international trade. In either case, the region is not immune.
I'll be thankful when Europe's debt issue is resolved.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
November 22, 2011 in Economic Growth and Development, Exports, Southeast, Trade | Permalink
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10/21/2011
Some growth is better than none
As a lifelong Cleveland Browns fan, I'm prone to pessimism. A win on Sunday only brings expectations of a loss next Sunday. I wait for good news, then don't believe it when it comes. It's a tough way to go through a football season, but I can't help it.
Tracking the economy over the last few years is a perfect fit for a Browns fan—good news followed shortly by bad. When positive economic reports come out, skepticism creeps in. In September, several pieces of economic data came in better than expected and, when combined with what our business contacts in the region were telling us, paint a picture of an economy that appears to be doing better than what we experienced over the summer. Let's look closer.
The lead from the October 19 Beige Book summary reads:
"Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to expand in September, although many Districts described the pace of growth as modest or slight."
The opening sentence from the Sixth District's section of the Beige Book struck a similar note:
"Business contacts in the Sixth District indicated that economic activity continued to expand at a modest pace in September."
The message here is an important one. Businesses here in the Southeast and in most other regions are telling us that the economy does not appear to be contracting. True, the overall pace of activity may be modest or slight, but we were told that it is still positive. Recent data support what our contacts were telling us. As Atlanta Fed President Dennis Lockhart said in his October 18 speech to the CFA Society of East Tennessee in Chattanooga:
"The somewhat overlooked story of the period since the end of August is that much of the incoming data have exceeded most forecasters' low expectations. For the third quarter at least, it appears that downgrades of growth forecasts have been too pessimistic."
Of course, we're not going to proclaim that the economy is clearly on a path to significantly better outcomes based on a month of data and anecdotal information. After all, three weeks ago the Browns were 2-1 and tied for first place. Today we are 2-3 and in the cellar.
Along those lines, it is important to recognize that modest economic growth does not help address the high rate of unemployment. As President Lockhart noted in Chattanooga:
"[M]ost private sector forecasters envision growth in 2012 approaching 2.5 percent. In the opinion of many economists, that 2.5 percent approximates the steady-state growth rate of the economy's potential. This rate would certainly be an improvement over 2011 as a whole. The problem is without growth measurably better than 2.5 percent, little progress will be made in absorbing slack in the economy—above all, labor market slack."
The Atlanta Fed's Beige Book recorded little improvement in regional labor markets in September:
"Employers continued to manage their labor supply very tightly. Most contacts indicated that the outlook for hiring remained restrained by modest expectations regarding future sales. Several reports suggested that permanent employees were primarily being used to maintain a firm's core business, while specific projects were being assigned to contractors and temporary hires. Firms continued to seek efficiency gains through investment in technology and other cost-saving applications."
Although not mentioned in our Beige Book, we should also note that while we did not pick up on significant plans to increase employment in our discussions with business contacts, we also did not hear much in the way of plans to reduce current levels of employment. The economy may not be improving enough to help cut into unemployment much, but it appears to be doing well enough to prevent further job declines.
Back to the Browns. They are playing better and we may be looking at a .500 season. After two straight years of going 5-11, 8-8 looks pretty good. But, like the Browns, a steady-state rate of growth and not experiencing further reductions in employment is not the best outcome, but it is better than where we were a few years ago.
President Lockhart concluded in Chattanooga that
"[A]s the numbers over the last couple of months demonstrate, outcomes better than consensus expectations can happen. Let's not talk ourselves into believing that enduring weakness or recession is inevitable."
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research
department
October 21, 2011 in Beige Book, Economic Growth and Development, Forecasting, Labor Markets, Outlook, Southeast | Permalink
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09/30/2011
When will economic vigor return to the Southeast?
The New York Times published a story by Michael Cooper earlier this week titled "Deep Recession Sharply Altered U.S. Jobless Map." The article looks at differences among state unemployment rates and focuses on how the South's unemployment rates are higher than most other areas of the country. Cooper writes:
"The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show."
This is clearly the case, and the Times piece has a set of charts that illustrate the point. What the chart does not show is that apart from the 2002–7 period, the states that represent my part of the South (the Sixth Federal Reserve District: Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee) had a similar or higher rate of unemployment than did the rest of the country between 1976 and 2002. The question that arises, and one that we continue to investigate, is whether the current period Cooper writes about is all that abnormal.
Getting back to the main point of the Times article, that the region's unemployment rates are higher than the rest of the country, Cooper spoke to a number of people in researching the article:
"Economists offer a variety of explanations for the South's performance. 'For a long time we tended to outpace the national average with regard to economic performance, and a lot of that was driven by, for lack of a better word, development and in-migration,' said Michael Chriszt, an assistant vice president of the Federal Reserve Bank of Atlanta's research department. 'That came to an abrupt halt, and it has not picked up.' "
Shameless plug notwithstanding, the point was that the driving force behind the region's economic growth was population gains, which in turn ignited development and, in the case of Florida and Georgia in particular, overbuilding in both residential and commercial space.
The slowdown in population growth to the levels experienced by the rest of the country explains a big part of the regional economic deceleration. The above chart shows the difference between our region's growth rate and that of the rest of the country from 1970 to 2010. From 1970 to 2005 the region's rate of growth exceeded the rest of the country, but from 2006 through 2010 it was lower.
Richard Kaglic, my colleague at the Richmond Fed, had a great quote in the same Times article:
" 'If your nose is high, if you're climbing faster and your engine cuts out, you fall farther and it takes you a longer time to recover,' he said. 'The conditions we experienced in late 2008, 2009, are as close as you come to an engine-out situation in the economy.' "
I'm not a pilot like Richard, but we can use the same analogy for the states in the Atlanta Fed's district. We'll be digging deeper into the reasons behind the region's higher rate of unemployment, but it's clear that the major factor behind the Southeast's recent underperformance is the falloff in population growth and the resulting drop in residential and commercial real estate development that had been driving regional economic growth.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research
department
September 30, 2011 in Construction, Economic Growth and Development, Employment, Labor Markets, Real Estate, Southeast | Permalink
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07/07/2011
What a difference a year makes
The region's tourism sector continues to improve—nowhere more so than along the Alabama Gulf Coast, especially when we consider where we were last year on Independence Day:
The Mobile Press-Register's report from the Alabama coast on July 4, 2010, contained this passage:
"The sun shone, the sand glistened and the water was pleasant Sunday at Dauphin Island's public beach. There was only one thing missing from this otherwise perfect 4th of July: People.
"On the 76th day of the ongoing oil spill disaster, only a couple dozen visitors were at the beach at 1:30 p.m. on what is usually one of the busiest days of the summer."
The Associated Press coverage from the Alabama coast on July 4, 2011, contained this report:
"State officials are expecting a big week for tourism along Alabama's coast. … Promoters say almost all of the 17,000 condominiums and hotels in southern Baldwin County are full through the Fourth of July.
"The area's 2,500 camp sites also are occupied, and many guests are staying through next weekend."
More broadly, our contacts in the leisure and hospitality sector throughout the region continue to convey positive reports. From Miami Beach to Dollywood, tourist activity is up. As noted above, beachgoers are visiting the coasts. Attendance at festivals in Tennessee and New Orleans is well up from year-ago levels. The Federal Reserve's last Beige Book report from the Atlanta District noted that:
"Tourism activity improved further throughout the District. Occupancy and room rates were boosted by increases in both business and leisure travel. Convention and cruise bookings have increased as well. Overall, contacts in the travel industry remained optimistic."
The bottom line? People are taking vacations and spending at healthy levels.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
July 7, 2011 in Alabama, Beige Book, Gulf Coast, Oil Spill, Southeast, Tourism | Permalink
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04/07/2011
The Great Rebalancing: State and local government fiscal challenges
Earlier this week, Federal Reserve Bank of Atlanta President Dennis Lockhart spoke in West Palm Beach, Fla., about the current phase of American economic history, which he termed the "Great Rebalancing." (In his remarks, Lockhart noted that he borrowed this term from a reference to the economic recovery in Britain.) Lockhart sees three rebalancing processes now under way: rebalancing of consumption and savings, regulatory rebalancing, and fiscal rebalancing. With regard to the latter, he noted that
"Spending cuts have begun at all government levels, and some improvement in revenues is now being reported. The extent of cuts is being discussed, quite literally, as we speak."
While, as Lockhart noted, it is too early to determine the outcome of overall fiscal rebalancing at the national or state level, we can look at public sector employment at the state and local levels to see where some of this rebalancing currently is taking place. State and local employment data through February show that the number of public sector workers (excluding federal employment) has been on the decline for some time, while private sector employment is increasing.
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With regard to improvements in revenues, the data are more clear. Looking at the states in the Southeast, revenues are indeed on the upswing.
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A recent report by the Nelson A. Rockefeller Institute of Government, written by Lucy Dadayan, senior policy analyst, and Donald Boyd, senior fellow, confirms that
"After the deepest recession since the Great Depression, most states are now on the gradual road to tax revenue recovery."
President Lockhart's view that fiscal rebalancing lies mostly ahead of us is confirmed by the Rockefeller Institute authors, as they caution that
"Broad state fiscal conditions remain fragile. The longer-term outlook is still ominous due to record revenue declines during the Great Recession, spending trendlines still pointing upward, and unemployment rates remaining nearly double their prerecession levels, to name a few. While some economic indicators signal improvement in overall conditions, fiscal recovery for the states typically lags a national turnaround and is likely to take several years."
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
April 7, 2011 in Economic Growth and Development, Fiscal Policy, Recession, Sales Tax, Southeast | Permalink
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03/02/2011
Southeast retail update: A bump in the road for retailers in January
The Federal Reserve Bank of Atlanta's monthly poll of regional retailers indicated that retail activity in January was disappointing following a strong holiday season. Similarly, the national retail sales report released by the U.S. Census Bureau showed a less than expected increase in sales in January, following strong gains in previous months (see chart 1).
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District retailers reported that sales for January were mixed compared with a year earlier, but most respondents reported that sales were down slightly (see chart 2). Many survey respondents noted that the inclement weather in January was the leading cause of the soft sales. Despite the lackluster January sales, almost 70 percent of the survey respondents were positive about the outlook for the coming months.
Overall, consumer spending has not yet returned to prerecession levels. Among the factors restraining consumers from spending is continued deleveraging, as Atlanta Fed President Dennis Lockhart discussed in his recent speech to the Rotary Club of Atlanta. Consumers have been reducing their debt and saving more of their income in response to the loss of wealth during the economic downturn; for many, the fall in home prices had a great impact on household finances. According to the Atlanta Fed's most recent survey of residential real estate brokers, short sales, real-estate-owned sales, and pending foreclosures are still placing downward pressure on home prices.
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The retail survey diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity while negative values indicate decreased activity.
Earlier in the year, contacts throughout the region reported that they would continue their lean inventory management as they have throughout the recession. Some noted that they would conservatively replenish nonseasonal items after being depleted from strong holiday sales. Retailers were encouraged by the increase in holiday sales and consumer confidence but remain cautious in terms of inventory management.
In January, most retailers reported that their inventories were unchanged and almost 30 percent reported inventories were down slightly (see chart 3). This result is also consistent with the aforementioned monthly national data from the U.S. Census Bureau, as growth of retail inventories have experienced pronounced slowing. The inventory to sales ratio for retail has decelerated since mid-2010, and is at 1.33 for December 2010 (see chart 4).
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Note: January poll results are based on responses from 32 retailers and were collected February 7–16, 2011.
By Sandra Kollen, a senior analyst in the Atlanta Fed's research department
March 2, 2011 in Retail, Southeast | Permalink
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02/09/2011
Regional input cost, manufacturing indicators rise in January
The Econometrics Center at Kennesaw State University released its monthly Purchasing Managers' Index (PMI) report on manufacturers across the Sixth District this week. In January, the Southeast PMI continued its upward trend as Sixth District manufacturers hinted at a slightly brighter current economic picture and expressed an improving outlook.
Rising input costs were also reflected in the Southeast PMI's Commodity Prices component, which read 82.3 in January. Yet, as the Atlanta Fed's most recent Beige Book contribution noted:
"A majority of business contacts indicated that current cost pressures remained high, citing increasing material prices and rising labor and benefits outlays. However, most firms remained reluctant to pass input cost increases through to consumers given intense competitive pressures."
Atlanta Fed President Dennis Lockhart discussed the topic in his recent speech in Anniston, Ala.:
"And because movements of commodity and other 'headline' prices seem to be creating the impression in the popular consciousness of a growing inflation problem, I would like to give particular attention today to inflation."
Speaking specifically about his view on inflation, President Lockhart noted:
"What we're searching for is the underlying inflation trend that the FOMC [Federal Open Market Committee] statement talks about and which we want to control. And since an exact fix on the state of inflation is elusive in the short run, the best policy approach, in my opinion, is to pursue a low, but positive rate of inflation over the longer term. As a policymaker, I think of the desirable level of inflation as high enough to provide a cushion of safety against the risk of tipping into deflation but low enough to be largely irrelevant—not a consideration—in long-term decision making. For me, this number is around 2 percent.
"Notwithstanding the energy-driven jump in prices in December, underlying inflation is currently below the level that I would define as price stability. My current projection shows underlying inflation gradually rising over the next few years, putting us back into a range consistent with the 2 percent target by 2013. Key to the realization of this inflation forecast is that inflation expectations of the public remain well anchored. And for this to happen, the public has to have a good appreciation of what the central bank is trying to achieve and have adequate faith that we will achieve it."
On manufacturing
The overall Southeast PMI as measured by our friends at KSU increased 2.5 points in January, putting the index at 58.9. The national PMI gained just a little less than the regional PMI in January (rising 2.3 points) to reach 60.8.
Both the regional and national indicators have taken a relatively sharp upward turn over the last couple of months, but the Southeast PMI remains on the heels of the national PMI, in their aggregate forms and in most underlying variables.
Though it continues to lag behind the national measure, the new orders index for manufacturers in the Southeast has seen significant upticks over the last few months. As new orders are a leading indicator, this upward movement is encouraging for future production levels. Also noted in the latest report, 63 percent of survey participants across the Southeast said they had plans to increase production levels in the next three to six months, up from 54 percent reporting plans to increase near-term production in December 2010.
Several other Federal Reserve Banks produce monthly manufacturing surveys that yielded similar results as the KSU PMI survey for January. Higher aggregate indices and particularly higher levels of new orders were noticed in the New York Fed's Empire State manufacturing survey (where data is indexed to 0 instead of 50), and the Philadelphia Fed's manufacturing survey, where the new orders index jumped 13 points. Future expectations for new orders were also higher in most regional surveys. Half of respondents in the Kansas City Fed's manufacturing survey indicated they expect new orders to continue increasing over the next six months.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department,
and 
Mark Carter, an Atlanta Fed research analyst
February 9, 2011 in Inflation, Manufacturing, Prices, Southeast | Permalink
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01/05/2011
A look into 2011
January is the time when economic forecasts for the new year percolate throughout the country. The general consensus is that the U.S. economic recovery will remain on track, and the Atlanta Fed's assessment is in line with this consensus. The latest issue of the Bank's quarterly publication EconSouth reviews 2010 and comments on the outlook for 2011. Here are some highlights from the national outlook:
"While the U.S. economy has been expanding for almost a year and a half, and a number of key fundamentals such as business investment and consumer spending have picked up, the recovery has not been strong enough to meaningfully reduce the unemployment rate…
"Lingering joblessness, along with weak income growth, lower housing wealth, and tight credit, are acting as headwinds to the economic recovery…
"The U.S. economy is not all doom and gloom, however. Business investment, a particularly bright spot, grew at a 20 percent annual rate during the first three quarters of the year. This theme of improvement in some areas and ongoing weakness in others illustrates the unevenness of the recovery and heightened uncertainty about future economic prospects."
The story is much the same for the region:
"The Southeast economy in 2010 was marked by strength in some areas and continued weakness in others, with more of the same expected for 2011…
"The ailing real estate market has been a dark cloud over much of the Southeast economy. Florida's real estate market was especially hard hit, but it has also bounced back the strongest. Georgia has seen its share of real estate problems, which have hurt its banking sector. The state has the nation's most bank failures since the crisis began…
"Notwithstanding unprecedented cutbacks in production during the recession, regional vehicle manufacturing recovered in 2010. The region's production outlook is encouraging because of favorable consumer demand for products made here and additional plants that will expand production capacity in the coming year."
The issue also includes information on individual Southeast states:
"Alabama has shown some of the s strongest job growth among southeastern states, regaining in the first three quarters of 2010 about 18 percent of the jobs it lost in 2009. These job gains are reflected in one of the more dramatic drops in unemployment the region has seen since the recession. A fortunate implication of stronger job growth—and the greater spending expected to follow—is that Alabama is projecting the smallest state budget shortfall in the region for the current fiscal year. With the greatest share of pending stimulus projects among southern states, Alabama is poised for those projects to complement its current path of recovery.
"After suffering the hardest fall in real estate in the Southeast, Florida has seen the most dramatic recovery, with total residential sales through most of 2010 at 71 percent of their peak level seen in 2005. Florida is also experiencing its share of the relatively strong performance of manufacturing in 2010. Over the next few years, a drinkware manufacturer and a medical product manufacturer plan expansions there. Another boost to the state's economy in 2010 came from foreign travelers taking advantage of the weak dollar to visit the Sunshine State. On a more somber note, Florida is projecting one of the highest state budget shortfalls among southeastern states in the current fiscal year.
"Georgia holds the dubious honor of being home to the most bank failures in the United States since the banking crisis began and also faces the highest projected budget shortfall of the southeastern states for the current fiscal year. In spite of these financial challenges, farmers in the state have benefited from historically high cotton prices in 2010. In addition, biofuels have become big business in Georgia. The ready availability of privately owned forests has even attracted European manufacturing to the state to create jobs in the biofuel sector. The state has also topped others in the region in terms of tourism growth. Employment in that sector is growing at nearly twice the pace of tourism employment in the next fastest-growing state.
"With residential home sales at only 58 percent of their 2006 peak, Louisiana has the slowest-recovering real estate market among states in the region. On the upside, through the first three quarters of 2010, Louisiana regained the greatest percentage of jobs lost during 2009 (39 percent) and continues to enjoy the lowest unemployment rate among southeastern states. In addition, the announcement of a new facility producing electric and hybrid boats and other recreation vehicles in the state will further boost the region's growing green manufacturing sector. In spite of weak economic conditions, New Orleans once again saw record-breaking attendance at its many festivals and celebrations, including Mardi Gras.
"Mississippi has been slow in regaining jobs. Through the first three quarters of 2010, the state has regained only 7 percent of jobs lost in 2009. Only Georgia recovered a smaller share of lost jobs (less than 1 percent). On the other hand, Mississippi manufacturing is jumping on the green machine with the announcement of a start-up firm planning to manufacture energy-saving electrochromic windows and, over the next few years, the arrival of three biofuel plants.
"Tennessee is looking forward to when Volkswagen's automaking plant in Chattanooga begins production in 2011. The addition of the Leaf electric vehicle from Nissan, whose Smyrna manufacturing plant will be under construction through 2012, will add to the state's history of innovative automaking endeavors. The Volunteer State has enjoyed the fastest growth among southeastern states in personal income in 2010, resulting in one of the smallest projected shortfalls in state budgets in the region for the current fiscal year. The state is also one of the three leaders in the United States for clean technology jobs: 2010 saw the addition of hundreds of solar manufacturing jobs in Tennessee, and increased manufacturing of electric car–charging stations could produce further jobs in coming years. On the downside, flooding in 2010 devastated tourism in Nashville during the traditionally busy summer months."
By Michael Chriszt
Assistant vice president in the Atlanta Fed research department
January 5, 2011 in Alabama, Florida, Georgia, Louisiana, Mississippi, Outlook, Southeast, Tennessee | Permalink
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10/21/2010
Tourism's outlook brightens
For those in the tourism industry, conditions are improving, and contacts in the District are optimistic about the future. The members of the travel and tourism advisory council, who meet twice a year at the Federal Reserve Bank of Atlanta's Miami Branch, reported last week that for their industry, recovery was well on its way and that the outlook has brightened.
Hotel occupancy rates in some of the larger destinations in the Southeast have improved compared with last year (see the chart), although 2009 was a tough year for hotels. Contacts have noticed that not only has business travel increased recently but also that group travel bookings are on the rise, giving way to higher expectations for 2011.
A major source of tourism growth has come from abroad. International visitors to the United States, especially to the Southeast, have increased significantly. The table below shows passenger traffic at some of the major airports in the District. According to the Federal Aviation Administration, of the 30 busiest airports in the United States, Atlanta ranks number one, and the airports in Orlando, Miami, and Fort Lauderdale, Fla., are also on the list.
Meanwhile, contacts noted that domestic travelers are still looking for deals and discounts. Members on the advisory council employed in the cruise line industry reported that while demand still exists for cruises, it is for less exotic and less distant cruises. In addition, passengers are not spending onboard as much as they did before the recession began. Similarly, contacts in the restaurant business also noted that spending at restaurants has downshifted. Not only are clients going out to restaurants less often, but when they do go out, they're buying less expensive meals at lower-cost restaurants.
One of the biggest hurdles for the Southeastern tourism industry was and continues to be the BP oil spill. Members of the advisory council confirmed that the effect of the oil spill on their business was substantial; however, the challenge lying ahead is travelers' perception of the Gulf Coast. A risk factor for the tourism industry is long-term damage to the Gulf Coast brand as a fishing, recreation, and tourism destination.
Despite the challenges facing the tourism industry, the outlook remains bright. As one member of the council put it, "People still want to take their vacations, even if that means cutting back elsewhere."
By Sandra Kollen, a senior analyst in the Atlanta Fed's research department
October 21, 2010 in Southeast, Tourism | Permalink
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07/20/2010
Southeastern housing update
The Federal Reserve of Atlanta's monthly survey of Realtors and homebuilders in its region saw home sales weaken notably in June though sales remained above last year's levels. Many brokers noted that sales continued to benefit from the housing stimulus as buyers closed on contracts signed prior to the April 30, 2010, deadline. However, close to half of survey respondents reported that sales in June declined compared with May.
Reports from Southeastern homebuilders indicated that new home sales also continued to weaken in June, falling farther below last year's level.
Buyer traffic continued to soften in June on a year-over-year basis.
Reports also indicated that traffic slowed notably from May to June. Typically, buyer traffic rises from May to June and remains strong in June, but more than half of brokers and builders surveyed reported that buyer traffic declined from May to June.
The outlook for sales growth among both brokers and builders continued to weaken.
Note: June survey results are based on responses from 83 residential brokers and 54 homebuilders and were collected July 5–15. The housing survey's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity while negative values indicate decreased activity.
By Whitney Mancuso, analyst in the Atlanta Fed's research department
July 20, 2010 in Housing, Southeast | Permalink
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