tony villamil florida entered the new year with strong economic momentum: a positive environment...
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Tony Villamil
www.weg.com
Florida Entered the New Year with Strong Economic Momentum:A Positive Environment for South Florida Real Estate
Economic Outlook: It’s the Economy! Get Smart on What to Expect in 2015
January 28, 2015
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Economic Drivers and Long-Term Fundamentals of South Florida* are Mostly Positive for 2015 and Beyond
US Economic Activity/ Financial Indicators
Global Economic Performance
Florida Business Climate
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South FloridaFundamentals
West Palm Beach
Broward
Miami-Dade
*Comprised of Miami-Dade, Broward and Palm Beach Counties.
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Economic Driver Outlook 2015
Florida “Operating on All Cylinders” as we Enter 2015:US and Global Economies, Together with State Business Climate,
are Key Drivers of South Florida
US Economy
Economy growing at 3% plus this year: Positive for key industries of Florida and South Florida such as Wholesale Trade, Construction, Retail, Tourism, Professional Services and Manufacturing
Florida Business Climate
Pro-growth Governor and Legislature. Election results solidify top business climate. Low and stable taxes, positive fiscal situation, aggressive recruitment, retention and expansion of companies by Governor/EFI
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Global EconomyA mixed performance continuing in 2015. Euro Zone slow growth. Canada, Asia and most of Latin America countries experiencing moderate growth
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Household Net Worth: Positive for Consumer Spending Increasing in 2015
2008 2009 2010 2011 2012 2013 2014-Q1 2014-Q2 2014-Q3$40
$45
$50
$55
$60
$65
$70
$75
$80
$85
$57 $58
$63 $64
$70
$79 $80 $81 $81
$ Tr
illio
n
Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
Up$24 Trillion
Since ‘08
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Source: Federal Reserve Bank, Flow of Funds Accounts, Flows and Outstandings, 3Q-2014 (Dec 11, 2014).
US Non-Financial Debt: Households Borrowing Prudently, Business Debt Growing
Years Households Business State & Local Governments Federal
Financial and Housing “Bubbles”
200520062007
11.29.76.7
9.010.913.6
5.83.95.5
7.03.94.9
The “Great Recession” and the Aftermath
200820092010201120122013
-0.2-1.7-2.6-1.50.21.5
6.3-2.3 1.54.76.05.1
0.64.02.3-1.7-0.2-1.3
24.222.720.211.410.96.5
2014:Q12014:Q22014:Q3
2.33.42.7
6.05.05.2
-1.31.2-2.8
6.02.57.2
KeynesLives!
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Monetary Base: Record Breaking Growth:Exit Strategy of FED Keeps Me “Awake in Miami!”
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$ B
illio
ns
Source: Federal Reserve Bank of St. Louis Economic Research. Jan 2002-Dec 2014. Shaded areas indicate US Recessions.
From Q
E1 to Q
E3!
AmpleLiquidity
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Velocity of M2 Money Stock: Opportunity Cost of Holding Money is Very Low
Source: Federal Reserve Bank of St. Louis Economic Research. Q1:2002-Q3:2014. Shaded areas indicate US recessions.
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20141.5
1.6
1.7
1.8
1.9
2.0
2.1
Ratio
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US Economic Activity Likely to Gain Moderate Momentum in 2015:A Positive Development for South Florida Real Estate Industries
Sources: BEA and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
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2009 2013 2014E 2015F-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
-3.5%
2.0%2.5%
3.0%
US Real GDP Growth(Annual Average)
"Great Recession"
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Global Economy Continues to Underperform Again in 2015:But There are Significant Country Differences
Source: International Monetary Fund, World Economic Outlook, January 20, 2015 Revision.
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2009 2013E 2014E 2015F-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
-1.0%
3.3% 3.3%3.5%
World Output Growth(Annual Average)
"Great Reces-sion"
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Top Business Climate, Low-Interest Rates and Declining Energy Prices are Propelling Florida and
South Florida to Another Strong Economic Year
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Florida’s Real GDP Growing Faster than National Average: State Likely to Grow Faster than Texas this Year!
Sources: Bureau of Economic Analysis and The Washington Economics Group, Inc. (WEG) for Estimate (E) and Forecast (F).
www.weg.com
2009 2013 2014E 2015F-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
-5.0%
2.2%3.1%
3.5%
Florida’s Real GDP Growth(Annual Average)
"Great Recession"
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Economic Activity Accelerated in South Florida During 2014:
Additional Gains Expected this Year
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South Florida Payroll Employment Growth Rose Strongly in 2014: Continued Solid Growth Expected this Year in a Variety of Industries
Category Dec 2013Employment
Dec 2014Employment
Over the Year Change
Over the Year % Change
Total Payroll Employment 2,414,400 2,487,200 +72,800 3.0%
Total Private 2,105,500 2,177,200 +71,700 3.4%
Trade, Transportation & Utilities 575,500 590,600 +15,100 2.6%
Professional & Business Services 378,700 396,700 +18,000 5.0%
Education & Health Services 352,700 363,100 +10,400 3.0%
Leisure & Hospitality 293,400 301,700 +8,300 3.0%
Financial Activities 167,300 172,700 +5,400 3.2%
Construction 97,200 104,900 +7,700 8.0%
Source: DEO, FREIDA, December 2014 Current Employment *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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South Florida* Housing Activity Consistent with Steady Growth:Preferably to “Boom and Bust”
Housing Indicators 2012 2013 2014
Housing Starts 11,477 17,225 21,311
Single-Family Home Sales 39,232 42,501 44,903
Median Single-Family Home Price ($) $202,200 $250,000 $265,000
Multifamily Home Sales 46,754 48,406 46,317
Multifamily Median Home Price ($) $103,000 $129,000 $145,000
Single-Family Homes (Months Supply Inventory) 4.9 4.9 5.4
Multifamily Homes (Months Supply Inventory) 5.4 5.9 6.8
Sources: Florida Realtors and US Census Bureau. *Comprised of Miami-Dade, Broward and Palm Beach Counties.
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Global “Brand” positive for expansion of key South Florida industries
Corporate relocations and growing technology hub of State
Higher education cluster
MIA/Fort Lauderdale airports
Port of Miami post Panama ships
Long-Term Fundamentals of South Florida Remain Strong for 2015 and Beyond: Strengthening the Cyclical Upturn
Strong Fundamentals Strengthen the Outlook for A Strong 2015 Economic Year
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“Bottom Line” 2015
Florida likely to outperform National economy again this year
Top performing State among “The Big Four” South Florida has become a leading region of Florida
Continued low-interest rates, declining energy prices and pro-growth State, add to the fundamental strengths of Florida and South Florida
Downside risks to monitor:
FED Policy Euro Zone and Japan “malaise” Middle East The “Executive Order” WH
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Visit us at: www.weg.com
Twitter: @tonyvillamil
THANK YOU!
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