Regional Economic Update for Southeast Portion of U.S.

The Federal Reserve Bank of Atlanta released a December 1st, 2010 report on the latest economic activity from the Sixth District of the Federal Reserve System.  A map of the Federal Reserve System shows the area that encompasses the Sixth District, which includes all of Georgia, Florida and Alabama, along with the eastern portion of Tennessee, and the southern halves of Mississippi and Louisiana.  Their economic findings are grouped into five areas:  manufacturing, employment, economic growth, inflation, and real estate, but my focus will be on three of the five areas.

U.S. manufacturing activity remains moderate.  We still saw growth, but it has slowed down since October with the Institute of Supply Management's Manufacturing Purchasing Managers Index (PMI) declining from 56.9 to 56.6.  As long as the index is above 50, this means that it is expanding.  However, it is not significant enough to indicate that the recovery is heating up.

Referring back to regional data on employment, we see some improvement in October.  The Sixth District added 29,000 jobs during this month with most of the gains occurring under in the leisure and hospitality sector.  Given our aging demographic relative to other regions of the U.S., that would be consistent of previous patterns.  In past months, we have seen significant decreases in government, but that trend moderated this month. 

Additional trends in employment can be found under the Economic Policy Institute's Economy Track, which looks at employment levels since the recession started in 2007.  A look at our region shows that we still have not recovered from all of the jobs lost since then.  Even though we can see that all regions experienced job loss, a look at the Sixth District demonstrates that we have been hit harder than other areas.  In particular, Florida and Georgia suffered greatly with job losses of 9.3% and 8%, respectively.  On the positive side, we can see that Louisiana has done better than most with only -1.3% loss in jobs.

A look at unemployment rates shows that half of the states within this region were better than the U.S. unemployment rate of 9.6% in October.  Louisiana, Tennessee, and Alabama all experienced lower unemployment rates with Louisiana the lowest at 8.1%.  In particular, Florida's unemployment rate stands out with a discouraging 11.9% with Georgia following them at 9.9%.  Most of this can be attributed to the housing markets that have disportionately affected Florida and Georgia.  Overall, the Sixth District had 10.3% unemployment.  The fact that all of Florida and Georgia is included in the Sixth District, while half of Lousiana and Tennessee are not is one of the reasons why unemployment rates are skewed upward here.

Real estate is one area that is holding performance back.  While there has been a slight improvement over the last month for the major cities of Atlanta, Miami and Tampa, almost all of their monthly and annual trends lag behind the rest of the country.  With foreclosures continuing to be a problem, it is possible that we have not reached the bottom.  Until we start to see home prices start to appreciate, it will be difficult to mount a strong recovery because higher housing prices instill more confidence for individuals and stimulate consumer spending.