Overall, the Southeast’s economy is picking up steam and is poised for above-average growth long-term, compared to the rest of the country. Of course, as Orlando and Atlanta demonstrate, each market has its own story to tell.
Despite recently hitting a lull, metro Orlando’s economy will recover more quickly than the national economy in both the near and long terms, as tourism picks up and labor force mobility improves. Conversely, while metro Atlanta’s economy has experienced improvements in the past months, it is poised to underperform the nation’s for the remainder of this year, due in no small part to its troubled real estate and banking sectors. Atlanta’s recovery should finally begin to accelerate in 2012.
Small Snags in Orlando
Job growth in metro Orlando slowed during spring and summer, as did tourism in the area. However, neither of the trends is cause for deep concern. Metro Orlando’s average hourly earnings growth fell below the national average earlier this year but the area’s unemployment rate recently declined from 11.7 percent to 10.1 percent, primarily because of hiring.
Other positive developments include a hotel occupancy rate that is significantly higher when compared to the same time last year, a declining office vacancy rate and a 33 percent rise in Small Business Administration lending.
Metro Orlando’s recent drop in tourism “will prove nothing more than a brief respite,” writes Chris Lafakis, an economist at Moody’s Analytics. The summer release of the final “Harry Potter” movie should boost attendance at Universal Studio’s Harry Potter exhibit. This fall’s opening of the Legoland amusement park in Winter Haven, Fla., and next spring’s unveiling of a number of new attractions at Walt Disney World also are expected to attract crowds.
A Big Help
The 61-mile SunRail commuter line, which will use existing freight lines and is slated to begin operations in 2014, will be a major boost to the metro Orlando economy, both in the short and long terms. The construction project could create up to 10,000 jobs. Once operating, SunRail will create several hundred permanent jobs and by alleviating traffic congestion, will attract both new residents and new businesses to the area.
Other reasons to believe that metro Orlando’s economy will outpace the nation’s for the foreseeable future include the region’s growing healthcare industry, its educated population and its reasonable costs of living.
Tough Times in Atlanta
There have been some positive signs in metro Atlanta’s economy, as both auto loan and credit card delinquency rates have returned to their pre-recession levels, and hiring has occurred across a number of sectors. However, several bad trends continue to plague the area.
In June, the area’s unemployment rate was 9.9 percent, while the national rate was 9.2 percent. Furthermore, the area’s foreclosure-per-household rate is double the national average, and approximately 35 percent of the area’s homes that have a mortgage are underwater. Depressed home prices will continue as more foreclosed properties hit the market; this in turn will decrease new construction and consumer spending, and will increase the stress on the area’s struggling banks.
The logistics and the hospitality industries will help fuel Atlanta’s recovery in 2012. As the national economy improves and as retailers restock their stores for the upcoming holiday shopping season, the area’s warehouses and trucking firms should see increased activity. Stabilizing fuel prices also should help Atlanta’s airline industry.
An improving national economy will mean good things for the Atlanta hospitality sector. With its abundant hotels and relatively inexpensive conference facilities, Atlanta always has been a favorite site for conventions. “Companies’ balance sheets are in good shape, and firms are flush with cash,” writes Xu Cheng, a senior economist at Moody’s Analytics. “As business spending improves, conference demand will increase in Atlanta.”
While metro Atlanta appears set for short-term struggles, the long-term outlook for the area is fairly strong. The rising population and business-friendly climate will combine with the logistics and hospitality sectors to make metro Atlanta’s economy an “above-average performer,” Moody’s says.