Economy Matters logo


The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.



Beige Book: Southeast economy improved through March; but what about April?

On April 13, the Sixth District's most recent Beige Book was released. The opening paragraph, which summarizes the entire report, said, "Sixth District business contacts described economic activity as advancing modestly from mid-February through March. Retailers cited that consumer spending improved while auto dealers reported strong sales growth. Tourism activity remained positive as occupancy rates and air travel mostly increased. Residential brokers and builders indicated that sales growth of new and existing homes were mixed, but generally remained weak, while commercial contractors mentioned improving conditions as development increased slightly. District manufacturers experienced increasing levels of new orders and production. Transportation firms noted modest advances in shipments and tonnage. Banking contacts reported soft but improving loan demand. Labor markets continued to recover at a gradual pace. Cost pressures grew for most District firms, but the ability to pass through price increases continued to vary by industry."

The report discusses economic activity that took place from mid-February through March, but the official release date lagged by a couple of weeks. In a time when data and information are so easily available, this type of lag can make the information seem dated. The Atlanta Fed is continuously gathering information via meetings with our Regional Economic Information Network contacts. Recently, we held two advisory council meetings, which gave us more insight into their particular sectors. On April 12 our Trade and Transportation Advisory Council met in Atlanta, and on April 14 our Travel and Tourism Advisory Council met in Miami. What follows is some of the anecdotal information collected from these meetings.

Trade and transportation
Demand is up for almost all industries in the transportation sector, especially for those involved in export activity. The trucking industry is seeing a return to pricing power but is challenged with finding qualified drivers and mechanics and faces a shortage of drivers amid new regulations. Increases in the cost of fuel are challenging all modes of transportation, but fuel surcharges remain intact. Intermodal volume is benefiting from increased fuel costs as customers move certain types of goods from truck to rail. Inventories remain very low and inventory turns are high; slow steaming in maritime shipments is creating floating inventories. All industries reported increases in capital expenditures for replacement and new equipment, information technology, and infrastructure and buildings. Hiring is taking place at some level in most industries, and wage pressures are just beginning to surface in parts of the sector. Events in Japan have not caused major disruptions but lags in shipments of certain goods and equipment have been reported.

Travel and tourism
Activity is up in almost all industries of the sector. Occupancy, room rates, and cruise and convention bookings are increasing. A modest level of pricing power has returned; however, increasing fuel and commodity costs are challenging all segments of the sector. Restaurant activity is mixed, and price increases are being passed through. Capital expenditure is increasing in most of the sector, and the overall tone was one of optimism with a cautious eye toward rising commodity costs. The areas and locations adversely affected by last year's BP oil spill have regained business, and many are back to normal levels.

Based on these meetings, it appears that the Sixth District's economy is still moving in a positive direction.

By Shalini Patel, a senior economic analyst in the research department, Sarah Arteaga, a senior REIN analyst, and Lon Lazzeri, a REIN director

April 26, 2011 in Beige Book, Tourism, Trade, Transportation, Travel | Permalink


TrackBack URL for this entry:

Listed below are links to blogs that reference Beige Book: Southeast economy improved through March; but what about April?:


Post a comment

Comments are moderated and will not appear until the moderator has approved them.

If you have a TypeKey or TypePad account, please Sign in


Logistics in the Southeast

(Note: This post is the first part of a two-part discussion of freight and logistics in the Southeast and beyond.)

The Jacksonville Branch of the Atlanta Fed regularly convenes an advisory council on trade and transportation. This council has existed since 2008 and is made up of industry leaders and experts from throughout the Sixth District. Members of this group have provided input to the Atlanta Fed, giving insight into this key component of the nation's economy, which has influenced forecasting and policy decisions. The "boots on the ground" intelligence we receive is also extremely useful in our contributions to the Beige Book on trade, transportation, and logistics issues.

I recently had the opportunity to participate in two conferences focused on challenges and opportunities in this business sector. The first, "Freight in the Southeast—Moving Our Region's Business," was coordinated by the Institute for Trade and Transportation Studies. I encourage you to visit the institute's website and get to know its executive director, Bruce Lambert. The institute's current membership includes the departments of transportation from states in the Sixth District (Florida, Georgia, Alabama, Tennessee, Mississippi, and Louisiana) as well as Arkansas, Kentucky, North Carolina, South Carolina, Virginia, and Puerto Rico. Its mission is to provide research data and expert opinions to its members concerning the effects of commercial freight movements on domestic and international activities as they relate to safety, infrastructure, and transportation.

The conference featured thought-provoking discussions on various topics affecting the industry and the economy more broadly. Examples include discussions on freight-planning activities at the state, regional, and national levels; managing today's and tomorrow's freight corridors, including the challenge of congestion; and trends in logistics and delivery. While participants agreed with one another on many points, there was healthy debate on a number of issues as well, including regulatory changes, particularly in the trucking industry; how to obtain funds needed for various infrastructure projects in both the short and long term; the intense competition among East Coast and Sixth District port authorities for limited federal and state dollars to fund port improvements; and dredging ports in anticipation of larger ships bringing goods to the Gulf and East Coast via the expanded Panama Canal.

Discussions on the state of the economy were also common; there was a consensus among participants that there is a pick-up in their industry and a level of confidence that has not been observed since the recession began. (In a recent post, SouthPoint focused on improving consumer confidence.) However, one presenter reminded us that "strengthening does not mean strong," alluding to improvement as compared with subpar performance in prior periods. Headwinds exist, but positive momentum appears to be building (and this momentum comes in a sector that touches just about every part of the U.S., if not the world, economy).

If there was any overarching theme, it was that collaboration is required to deal with both the challenges facing the sector as well as the opportunities presented. Participants seemed eager to work together to push the industry and the economy forward. I tip my hat to Bruce for coordinating this important conference and encourage readers to learn more. Next time, I'll share some insights from the Retail Industry Leaders Association 2011 Logistics Conference.

By Chris Oakley, vice president at the Atlanta Fed and Jacksonville Branch regional executive

February 25, 2011 in Transportation | Permalink


TrackBack URL for this entry:

Listed below are links to blogs that reference Logistics in the Southeast:


Post a comment

Comments are moderated and will not appear until the moderator has approved them.

If you have a TypeKey or TypePad account, please Sign in


Thoughts on Georgia's economic outlook and energy demands

On December 1, I participated in the program on "Promoting Sustainable Energy Resources," which was organized under the aegis of the Consulate General of France for the Southeastern USA and an array of French and American partner institutions and organizations. I'd like to outline my comments on that issue and related economic matters:

The national and state economies are recovering, but slowly.

Recent data and reports from business contacts indicated that economic activity rose modestly in October through mid-November.

Nationally, estimates indicate that real gross domestic product (GDP) grew 2.5 percent in the third quarter, similar to the modest growth rate posted in the second quarter.

The consensus real GDP forecast of economists is for positive but slow growth through 2011.

In Georgia, the recession was steeper and the recovery to date has been more muted than what we have seen in other areas of the nation. Nonetheless, the narrative of a slow, steady recovery holds for our state as well.

According to the U.S. Department of Energy, Georgia ranks ninth among all states in terms of total energy consumption. As the state's economy recovers, energy demand is expected to increase.

In manufacturing, recent data showed an increase in industrial activity in October, although the pace of growth appeared to decelerate in Georgia.

A notable share of Georgia's industrial output is tied to the construction sector, which we'll talk about in a minute. Because of the deep downturn in development, our manufacturing recovery may be a bit more tepid than what we're seeing at the national level.

Kennesaw State University's Econometric Center publishes a purchasing managers index (PMI) for Georgia. It reflects manufacturing activity at the state level. The survey asks plant managers about current production and orders, among other things, that feed into an overall index. Anytime that reading is above 50, it represents an expansion in manufacturing activity, and when it's below 50, it represents a contraction.

After spending nearly two years below 50, Georgia's PMI entered expansion territory early this year—rising steadily before decelerating in August, September, and October to a reading just above 50. Manufacturing is expected to continue to expand modestly going forward. As the state's industrial activity improves, its energy demands likely will rise.

I noted a moment ago that the state's construction sector is largely dormant. Census data show that after averaging roughly 8,000 new housing units through 2005, permits for new residential construction declined to below 1,000 in 2010. It's unlikely that this number will be picking up soon because of the large inventory of unsold homes on the market and the difficulties that remain in obtaining housing finance.

Energy demand for construction will therefore likely not be increasing at the pace seen earlier in the decade.

Transportation is another area of the economy that requires a lot of energy. Personal transportation is likely off where it was a few years ago because of the state's high unemployment rate; fewer people are driving to work.

That said, as personal spending increases as the economy recovers, the shipment of goods around the state will likely rebound. Georgia is a national logistics hub with the port of Savannah and transportation hubs like Atlanta. The state's energy consumption from freight transportation will therefore likely rise faster as the economy rebounds.

In short, Georgia's energy demands look like they are likely to rise in the short term as the economy recovers, and in the long term as the state returns to more normal growth patterns. Georgia has traditionally outpaced the national average in terms of the pace of economic growth, and there's every reason to believe that this pace will return once the remaining economic imbalances are worked out.

Providing the energy for this accelerated pace of economic activity is a central part of the story. During the recession, a number of developments have occurred that allow me to be optimistic when it comes to employing our energy resources more efficiently in the future.

First, many businesses—large and small, industrial and service-oriented—have undertaken serious programs to increase their energy efficiency. Doing more with less was a theme we heard over and over again from our business contacts in Georgia. This effort includes reducing their energy bills through investment in cost-saving equipment and installation of energy-reducing policies. We have initiated several energy-savings programs at the Atlanta Fed just in the last few years.

Doing more with less may also be reflected in the kind of homes that are built in Georgia, once we start building them again. Smaller, more energy-efficient homes may be the norm, and this type of home will help us contain energy demand from the residential sector.

For many car buyers in the last few years, fuel efficiency has been a major factor in the decision about what model to acquire. Fuel efficiency in cars and trucks is improving, and as long as consumers demand better and better results, manufacturers will have no choice but to make them.

Doing more with less, energy savings as a means to achieve greater cost savings (both in our businesses and in our homes), and increased fuel efficiency are ideas that have accelerated during the recession. These improvements will allow us to meet future energy demand, but they do not truly get to the question of sustainability.

I'd like to quote from an energy study done at the Atlanta Fed published in 2009 by my colleague Laurel Graefe. She writes:

"The supply of energy as we have known it is in the process of transition. Today's 'easy' conventional oil that the world relies upon as a primary energy source is being depleted, and, regardless of the exact timing of peak oil production—be it this year or fifty years down the road—the world faces the challenge of adapting to a new model of energy supply.

"The underlying issue in the debate regarding energy resource depletion is the fear that the transition from conventional oil to substitutes will be expensive and chaotic, leaving insufficient time for supply substitution and adaptation."

Finding substitutes for our current stock of energy resources is a question for today, not tomorrow. We are taking small steps to meet future demands more efficiently and with less pollution. That progress is all good. But we need to take bigger steps to really address the question of sustainability. More and more people will come to Georgia, and their demand for energy resources will continue to increase. Meeting that demand in a framework of sustainability is the issue of the 21st century.

By Michael Chriszt, an assistant vice president in the Atlanta Fed's research department

December 2, 2010 in Construction, Employment, Energy, Housing, Manufacturing, Transportation | Permalink


TrackBack URL for this entry:

Listed below are links to blogs that reference Thoughts on Georgia's economic outlook and energy demands:


Post a comment

Comments are moderated and will not appear until the moderator has approved them.

If you have a TypeKey or TypePad account, please Sign in

Google Search

Recent Posts

November 2015

Sun Mon Tue Wed Thu Fri Sat
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30          



Powered by TypePad