The Southeast is still trying to shake off the effects of the Great Recession, as its manufacturing and distribution sectors, as well as its housing markets, have suffered big blows. Over the long haul, however, the region’s economy is set to outperform the nation’s as a whole
Orlando and Atlanta, two of the Southeast’s biggest cities and home to Lincoln Property Company offices, are good examples of the economic trends at work in the Southeast. Both cities have seen certain sectors shed jobs lately – in Orlando, the manufacturing segment has been hit with job losses, while in Atlanta, the financial services, government and hospitality industries have been reducing headcounts.
Over the long term, however, Orlando and Atlanta will outperform the national economy, Moody’s predicts. In Orlando, the improving economic performance will be fueled by increased labor force mobility, growth in the healthcare and education industries, and a spike in tourism. Meanwhile, Atlanta will be buoyed by growth in the transportation/logistics, business services and hospitality segments.
Ongoing Trouble in Central Florida
Some familiar bugaboos continue to haunt Orlando. Loan delinquencies have risen recently, and the housing market is still weak. The manufacturing sector has shed jobs, and a declining unemployment rate – the rate dropped from 11.4 percent in 2010 to 10.4 percent last year – is counterbalanced by more discouraged job seekers quitting the labor force.
“Another recession is not imminent, however,” writes Chris Lafakis, an economist at Moody’s Analytics. “A solid majority of industries are expanding payrolls, average hourly earnings are rising as fast as they are nationally, and growth in industrial production is slightly outpacing the nationwide average.”
Two Orlando industries poised for substantial growth in the future are education and healthcare. The University of Central Florida is undertaking a number of expansion projects, and the Lake Nona medical complex continues to grow. Education and healthcare payrolls will increase at an average annual rate of 4.3 percent through 2015, substantially higher than the metro area average of 2.5 percent.
The new Legoland and some new attractions at Walt Disney World have boosted the local tourism industry, and another aid to the local economy will come with the FlexBus/SunRail project. SunRail is a 61-mile commuter train line that will use existing freight lines and is slated to begin operations in 2014. FlexBus is a busing system that will transport commuters from SunRail stops to retail and business districts throughout Central Florida.
SunRail and FlexBus will help the Orlando economy in a couple of ways. The preparation of the commuter line and the creation of bus stops will lead to construction jobs, and once they’re up and operating, SunRail and FlexBus will create a more mobile workforce and thus make Orlando a more appealing destination for businesses.
In 2012 and 2013, Orlando’s gross metro product should rise by 3.8 percent and 4.5 percent, respectively; the U. S. gross domestic product (GDP) will increase by 2.6 percent and 3.5 percent in those years, respectively.
The area’s unemployment rate should register at 10 percent for both 2012 and 2013. Those rates are higher than the projections for the nation as a whole, which are 9 percent for 2012 and 8.5 percent for next year.
Hard Times in Atlanta
The residential real estate market continues to trouble Atlanta – the number of homes that can be classified as REO is more than double the national average on a per-household basis – as does a weak banking sector and job losses in the government and manufacturing sectors.
However, the South’s biggest city still has some things going for it. An overall improving economy will boost the city’s substantial warehouse segment and increase activity at Hartsfield-Jackson International Airport, already the world’s busiest airport. This increased traffic will in turn boost hotel occupancy rates in Atlanta and increase jobs in the hospitality sector.
Furthermore, an improving national business climate will boost conference demand in Atlanta, which will have a positive impact on the city’s hotel and retail sectors.
Atlanta’s gross metro product will increase by 3.8 percent this year and by 5.2 percent in 2013, both of which are bigger increases than the U.S. GDP will experience in each of those years. At 9.6 percent, Atlanta will have a higher unemployment rate than the nation as a whole in 2012, but the city’s rate is forecast to drop to 8 percent in 2013, which is lower than the national forecast for that year.
Personal bankruptcies will increase from just more than 47,000 in 2011 to just less than 48,000 this year, but should begin to decline modestly next year.
Solid population growth and an overall business friendly climate will further aid the area’s recovery and enable it to out perform the national economy over the long haul, Moody’s says.