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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.


November 4, 2014

Heading into Fall, Florida's Recovery Continues

In an August SouthPoint post about economic conditions in north and central Florida, we stated that the sentiment of our contacts during the summer had been the most upbeat since before the recession. Since then, the Jacksonville REIN team has met with more than 50 business contacts, and it was very clear that the optimism was ongoing.

Contacts were upbeat as revenues and volumes increased. Demand for residential purchase mortgages met expectations, and residential lot development had made a comeback since the recession. Activity in multifamily real estate was robust, commercial loan activity improved, and office space absorption increased.

Employment and labor markets
Employment levels remained relatively flat for most, but some larger firms added to headcount. Complaints about difficult-to-fill positions persisted, though there was little evidence of contacts aggressively raising pay to attract talent. For some financial institutions, the increased availability of full-time positions in the marketplace has created turnover of part-time staff such as tellers. In addition to the usual difficult-to-fill positions (information technology, accounting, and compliance and risk), we heard stories of challenges filling lower level, low-skill positions in industries such as hospitality. In the Space Coast region, there were reports of overall shortages of workers.

Costs, wages, and prices
Most contacts indicated that nonlabor inputs have increased at about the rate of inflation. However, commodities like resins, plastics, and aluminum are expected to remain fairly flat for the foreseeable future. Construction costs in our area have reportedly stabilized, and fuel prices have lowered considerably. Food costs, particularly proteins, are up compared with last year.

Anecdotes about 2015 health care premiums were mixed, as increases ranged from less than 1 percent to as high as 20 percent. Many companies indicated that they plan to change benefit structures, raise deductibles, alter prescription plans, and eliminate dependent coverage (and so on) in an effort to avoid significantly increasing the proportion that employees pay as a result of worries about talent acquisition and retention. Others are moving ahead with shifting some measure of any increases to employees.

Most contacts reported moderate wage pressures for technically skilled positions. Some reported increased starting salaries for some lower-level jobs such as call center positions, and some are forced to offer more to attract those with internet or digital media skills. Most contacts continued to budget merit increases in the range of 2.5 to 3 percent.

Availability of credit and investment
Access to capital and availability of credit continued to be a nonissue for the majority of our contacts, but some small organizations continued to struggle for funds. Banking contacts reported strong loan demand for purchase mortgages in addition to new construction loans, refinances, home improvement loans, consumer loans, and increases in commercial loans. Reports of capital expenditures including major port expansions, health care facility construction projects, and merger and acquisition activity were widespread across the region.

Business outlook
Some contacts mentioned downside risks to the outlook, including the outcome of today's election, increased government regulations, and—most recently—worries about weakness internationally and the resulting market volatility that crept up in mid-October. Generally, however, contacts reported an expectation for higher growth in the short and medium term.

Tell us: What's your outlook for growth for the rest of 2014 and into the next year?

By Chris Oakley, regional executive, and Sarah Arteaga, REIN director, both at the Atlanta Fed's Jacksonville Branch

April 14, 2014

Our Bread and Butter

It’s spring, which means warming weather, getting out the gardening tools, and convening the semiannual meeting of the Atlanta Fed’s Agriculture Advisory Council, which represents diverse agriculture and agribusiness interests across the Southeast.

Prices are always a topic of conversation at council meetings. This meeting was no exception, and here are some examples of what we heard:

  • Fertilizer prices are up.
  • Feed prices are down from last year’s highs.
  • Fuel costs have been stable over the last year.
  • Equipment and seed costs are up.
  • Beef prices are up, and some producers are considering increasing herd size because of favorable prices and lower feed costs.
  • The value on the very best farmland is holding up, but farmland prices may see some corrections, with the biggest changes expected on marginally productive land.

Citrus greening is reducing the supply of Florida oranges, and growers continue to seek ways to mitigate the effects of the disease. Even though costs for products that help fight the disease are up, growers are saying, “If you think it works, you do it.” Growers hope that new research funding included in the recently approved farm bill will help find a solution, but concern also exists that as production declines, processing infrastructure will be lost, which may make it challenging to expand in the future.

Foreign markets have also affected growers. For example, cotton prices are in flux as a result of China’s pricing policy, while dairy prices are enjoying an uptick because of China’s increased purchases. Poultry producers expect this year to be a good one. The poultry industry is setting export records, and producers are saying exports represent future growth.

Finding labor remains difficult for most producers, and the problem is no longer just finding the numbers they need but increasingly finding those with the necessary technical skills as well. Producers are encouraging local junior colleges to offer technical programs for farm workers: “We need fewer but better-educated laborers,” one source said. There is also a growing need for data-management skills. Many growers will outsource data management/analysis to big companies specializing in that area.

Council members agreed that the outcome of the newly signed farm bill remains uncertain as the details are worked out, but they anticipate large farm producers will have to significantly restructure their businesses.

Another challenge is coming from the consumer side, as buyers require unprecedented amounts of information about health and wellness and sustainability processes from agriculture producers. Advisory council members acknowledge that technology makes it possible to supply this information, but the group recognized the need for agriculture producers to have a seat at the table when discussing new requirements.

As the meeting drew to a close, we went around the table one last time, and these comments are among what we heard:

  • “We will get more efficient.”
  • “There will not be a lot of inflation in agriculture in the next year or two.”
  • “Agriculture will go through another cycle of de-peopling,” but “…as the labor required to produce is decreasing, value and next-step processing is not shrinking.”

As I reflect on all I heard that day, I know technology will continue to play a big role in agriculture production, and its use is expanding every day. I also know from talking with our council members that good old-fashioned tenacity, know-how, and the love of farming shine through. The continued marriage of these disciplines will literally be our bread and butter for years to come.

Photo of Teri GaffordBy Teri Gafford, a Regional Economic Information Network director in the Atlanta Fed’s Birmingham Branch


February 6, 2014

Atlanta Fed Survey Highlights Regional Employment Plans for 2014

Given that the Federal Reserve’s dual mandate calls for maximizing employment, it shouldn’t surprise anyone that we continuously ask ourselves questions about labor market conditions. But we also ask our contacts. For the third year in a row, we reached out to our Regional Economic Information Network and asked the same questions regarding their employment plans for the year. The survey was conducted during January 6–10 and resulted in 554 responses. The sample represented a wide variety of firm types and sizes, and we want to discuss the results here.

The first question simply asked: Do you expect your firm to increase employment, leave employment unchanged, or decrease employment in 2014? A total of 46 percent of respondents said they planned to increase employment levels, similar to results from the previous two years. Another 44 percent indicated they planned to leave employment levels unchanged, a slight increase from a year ago and almost identical to two years ago. The remaining 10 percent of participants planned to decrease payrolls, down from 13 percent in January 2013 and nearly the same as reported in 2012 (see the chart).

Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next twelve months?

Digging a little deeper by singling out the 46 percent of firms that indicated that they planned to increase employment, we then asked contacts to select the most important factors driving their decision. Participants were instructed to rank the three factors in order from 1 (most important) to 3 (third most important). The results largely mirrored our findings from previous years (see the chart).

What are the most important factors behind your plans to increase employment?

A majority cited high expectations for sales growth as the most important reason. The second most often cited reason was the firm’s need for skills not possessed by existing staff. The third reason was that the firm’s current staff was overworked. However, in looking at totals across rankings, another frequently cited issue was improvement in the firm’s financial position.

On the flip side, we asked all participants to rank (in the same manner as the previous question) the three most important factors restraining hiring activity. Interestingly, in all three categories (first, second, and third most important), a majority selected the same factor: keeping operating costs low. Other frequently selected reasons were uncertainties related to health care costs, regulations, government policies, and expectations for low sales growth. These results were also similar to our findings from the previous two years (see the chart).

What are the three most important factors, if any, restraining your hiring plans?

In a nutshell, we can see that employment activity remains constrained by some of the factors mentioned above. However, as the latest Southeastern Insights, reports, hiring should modestly expand. The latest data from the U.S. Bureau of Labor Statistics, which indicated that net monthly payroll growth for the district averaged 30,200 for 2013 (up slightly from 26,200 a month in 2012), strongly support our conclusion.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed’s research department


December 18, 2013

Middle Tennessee Consumer Confidence: Down but Not Out

Earlier this week, my colleague Christine Viets wrote about how consumers appear to be spending very cautiously this holiday season. One indication of why spenders have been wary can be seen in this month’s Middle Tennessee Consumer Outlook Index. After posting gains throughout 2013, the index dropped in December. The decline suggests that consumers in Middle Tennessee have a less optimistic view of the economy than they did in September.

The Middle Tennessee Consumer Confidence survey is conducted by the Office of Consumer Research at Middle Tennessee State University, headed by Professor Timothy Graeff. Students in Professor Graeff’s marketing research course conduct the survey by phone. The survey asks 11 questions related to economic conditions in the United States as well as Middle Tennessee.

Participants felt better about the local economy than they did about the national economy. The survey indicated that consumers in Middle Tennessee are rather pessimistic about current business conditions in the United States. Only 12 percent of respondents believe national business conditions are good, while 26 percent believe conditions are bad. Opinions about Tennessee business conditions were better, with 42 percent indicating conditions are good versus 9 percent who believe conditions are bad.

Looking forward, responses were slightly better for the U.S. economy. When asked what conditions for the United States would be like in six months, 25 percent indicated things would be better, and 25 percent felt things would be worse. For Tennessee, 27 percent expressed conditions would improve, while 11 percent stated conditions would be worse.

Historically, Middle Tennessee consumers have been more optimistic about the future of the economy than national consumers. When comparing the November Conference Board Consumer Confidence Index and the Middle Tennessee survey, Middle Tennessee consumers remain more optimistic about the future of the economy, the job market, and their personal situation.

Importantly, even though the Middle Tennessee consumer outlook declined, it is still more positive than negative, suggesting that people will still be visiting malls and outlet stores in the area and that consumers in Middle Tennessee may buck the national trend.

By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch


November 4, 2014

Heading into Fall, Florida's Recovery Continues

In an August SouthPoint post about economic conditions in north and central Florida, we stated that the sentiment of our contacts during the summer had been the most upbeat since before the recession. Since then, the Jacksonville REIN team has met with more than 50 business contacts, and it was very clear that the optimism was ongoing.

Contacts were upbeat as revenues and volumes increased. Demand for residential purchase mortgages met expectations, and residential lot development had made a comeback since the recession. Activity in multifamily real estate was robust, commercial loan activity improved, and office space absorption increased.

Employment and labor markets
Employment levels remained relatively flat for most, but some larger firms added to headcount. Complaints about difficult-to-fill positions persisted, though there was little evidence of contacts aggressively raising pay to attract talent. For some financial institutions, the increased availability of full-time positions in the marketplace has created turnover of part-time staff such as tellers. In addition to the usual difficult-to-fill positions (information technology, accounting, and compliance and risk), we heard stories of challenges filling lower level, low-skill positions in industries such as hospitality. In the Space Coast region, there were reports of overall shortages of workers.

Costs, wages, and prices
Most contacts indicated that nonlabor inputs have increased at about the rate of inflation. However, commodities like resins, plastics, and aluminum are expected to remain fairly flat for the foreseeable future. Construction costs in our area have reportedly stabilized, and fuel prices have lowered considerably. Food costs, particularly proteins, are up compared with last year.

Anecdotes about 2015 health care premiums were mixed, as increases ranged from less than 1 percent to as high as 20 percent. Many companies indicated that they plan to change benefit structures, raise deductibles, alter prescription plans, and eliminate dependent coverage (and so on) in an effort to avoid significantly increasing the proportion that employees pay as a result of worries about talent acquisition and retention. Others are moving ahead with shifting some measure of any increases to employees.

Most contacts reported moderate wage pressures for technically skilled positions. Some reported increased starting salaries for some lower-level jobs such as call center positions, and some are forced to offer more to attract those with internet or digital media skills. Most contacts continued to budget merit increases in the range of 2.5 to 3 percent.

Availability of credit and investment
Access to capital and availability of credit continued to be a nonissue for the majority of our contacts, but some small organizations continued to struggle for funds. Banking contacts reported strong loan demand for purchase mortgages in addition to new construction loans, refinances, home improvement loans, consumer loans, and increases in commercial loans. Reports of capital expenditures including major port expansions, health care facility construction projects, and merger and acquisition activity were widespread across the region.

Business outlook
Some contacts mentioned downside risks to the outlook, including the outcome of today's election, increased government regulations, and—most recently—worries about weakness internationally and the resulting market volatility that crept up in mid-October. Generally, however, contacts reported an expectation for higher growth in the short and medium term.

Tell us: What's your outlook for growth for the rest of 2014 and into the next year?

By Chris Oakley, regional executive, and Sarah Arteaga, REIN director, both at the Atlanta Fed's Jacksonville Branch

April 14, 2014

Our Bread and Butter

It’s spring, which means warming weather, getting out the gardening tools, and convening the semiannual meeting of the Atlanta Fed’s Agriculture Advisory Council, which represents diverse agriculture and agribusiness interests across the Southeast.

Prices are always a topic of conversation at council meetings. This meeting was no exception, and here are some examples of what we heard:

  • Fertilizer prices are up.
  • Feed prices are down from last year’s highs.
  • Fuel costs have been stable over the last year.
  • Equipment and seed costs are up.
  • Beef prices are up, and some producers are considering increasing herd size because of favorable prices and lower feed costs.
  • The value on the very best farmland is holding up, but farmland prices may see some corrections, with the biggest changes expected on marginally productive land.

Citrus greening is reducing the supply of Florida oranges, and growers continue to seek ways to mitigate the effects of the disease. Even though costs for products that help fight the disease are up, growers are saying, “If you think it works, you do it.” Growers hope that new research funding included in the recently approved farm bill will help find a solution, but concern also exists that as production declines, processing infrastructure will be lost, which may make it challenging to expand in the future.

Foreign markets have also affected growers. For example, cotton prices are in flux as a result of China’s pricing policy, while dairy prices are enjoying an uptick because of China’s increased purchases. Poultry producers expect this year to be a good one. The poultry industry is setting export records, and producers are saying exports represent future growth.

Finding labor remains difficult for most producers, and the problem is no longer just finding the numbers they need but increasingly finding those with the necessary technical skills as well. Producers are encouraging local junior colleges to offer technical programs for farm workers: “We need fewer but better-educated laborers,” one source said. There is also a growing need for data-management skills. Many growers will outsource data management/analysis to big companies specializing in that area.

Council members agreed that the outcome of the newly signed farm bill remains uncertain as the details are worked out, but they anticipate large farm producers will have to significantly restructure their businesses.

Another challenge is coming from the consumer side, as buyers require unprecedented amounts of information about health and wellness and sustainability processes from agriculture producers. Advisory council members acknowledge that technology makes it possible to supply this information, but the group recognized the need for agriculture producers to have a seat at the table when discussing new requirements.

As the meeting drew to a close, we went around the table one last time, and these comments are among what we heard:

  • “We will get more efficient.”
  • “There will not be a lot of inflation in agriculture in the next year or two.”
  • “Agriculture will go through another cycle of de-peopling,” but “…as the labor required to produce is decreasing, value and next-step processing is not shrinking.”

As I reflect on all I heard that day, I know technology will continue to play a big role in agriculture production, and its use is expanding every day. I also know from talking with our council members that good old-fashioned tenacity, know-how, and the love of farming shine through. The continued marriage of these disciplines will literally be our bread and butter for years to come.

Photo of Teri GaffordBy Teri Gafford, a Regional Economic Information Network director in the Atlanta Fed’s Birmingham Branch


February 6, 2014

Atlanta Fed Survey Highlights Regional Employment Plans for 2014

Given that the Federal Reserve’s dual mandate calls for maximizing employment, it shouldn’t surprise anyone that we continuously ask ourselves questions about labor market conditions. But we also ask our contacts. For the third year in a row, we reached out to our Regional Economic Information Network and asked the same questions regarding their employment plans for the year. The survey was conducted during January 6–10 and resulted in 554 responses. The sample represented a wide variety of firm types and sizes, and we want to discuss the results here.

The first question simply asked: Do you expect your firm to increase employment, leave employment unchanged, or decrease employment in 2014? A total of 46 percent of respondents said they planned to increase employment levels, similar to results from the previous two years. Another 44 percent indicated they planned to leave employment levels unchanged, a slight increase from a year ago and almost identical to two years ago. The remaining 10 percent of participants planned to decrease payrolls, down from 13 percent in January 2013 and nearly the same as reported in 2012 (see the chart).

Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next twelve months?

Digging a little deeper by singling out the 46 percent of firms that indicated that they planned to increase employment, we then asked contacts to select the most important factors driving their decision. Participants were instructed to rank the three factors in order from 1 (most important) to 3 (third most important). The results largely mirrored our findings from previous years (see the chart).

What are the most important factors behind your plans to increase employment?

A majority cited high expectations for sales growth as the most important reason. The second most often cited reason was the firm’s need for skills not possessed by existing staff. The third reason was that the firm’s current staff was overworked. However, in looking at totals across rankings, another frequently cited issue was improvement in the firm’s financial position.

On the flip side, we asked all participants to rank (in the same manner as the previous question) the three most important factors restraining hiring activity. Interestingly, in all three categories (first, second, and third most important), a majority selected the same factor: keeping operating costs low. Other frequently selected reasons were uncertainties related to health care costs, regulations, government policies, and expectations for low sales growth. These results were also similar to our findings from the previous two years (see the chart).

What are the three most important factors, if any, restraining your hiring plans?

In a nutshell, we can see that employment activity remains constrained by some of the factors mentioned above. However, as the latest Southeastern Insights, reports, hiring should modestly expand. The latest data from the U.S. Bureau of Labor Statistics, which indicated that net monthly payroll growth for the district averaged 30,200 for 2013 (up slightly from 26,200 a month in 2012), strongly support our conclusion.

Photo of Shalini PatelBy Shalini Patel, an economic policy analysis specialist in the Atlanta Fed’s research department


December 18, 2013

Middle Tennessee Consumer Confidence: Down but Not Out

Earlier this week, my colleague Christine Viets wrote about how consumers appear to be spending very cautiously this holiday season. One indication of why spenders have been wary can be seen in this month’s Middle Tennessee Consumer Outlook Index. After posting gains throughout 2013, the index dropped in December. The decline suggests that consumers in Middle Tennessee have a less optimistic view of the economy than they did in September.

The Middle Tennessee Consumer Confidence survey is conducted by the Office of Consumer Research at Middle Tennessee State University, headed by Professor Timothy Graeff. Students in Professor Graeff’s marketing research course conduct the survey by phone. The survey asks 11 questions related to economic conditions in the United States as well as Middle Tennessee.

Participants felt better about the local economy than they did about the national economy. The survey indicated that consumers in Middle Tennessee are rather pessimistic about current business conditions in the United States. Only 12 percent of respondents believe national business conditions are good, while 26 percent believe conditions are bad. Opinions about Tennessee business conditions were better, with 42 percent indicating conditions are good versus 9 percent who believe conditions are bad.

Looking forward, responses were slightly better for the U.S. economy. When asked what conditions for the United States would be like in six months, 25 percent indicated things would be better, and 25 percent felt things would be worse. For Tennessee, 27 percent expressed conditions would improve, while 11 percent stated conditions would be worse.

Historically, Middle Tennessee consumers have been more optimistic about the future of the economy than national consumers. When comparing the November Conference Board Consumer Confidence Index and the Middle Tennessee survey, Middle Tennessee consumers remain more optimistic about the future of the economy, the job market, and their personal situation.

Importantly, even though the Middle Tennessee consumer outlook declined, it is still more positive than negative, suggesting that people will still be visiting malls and outlet stores in the area and that consumers in Middle Tennessee may buck the national trend.

By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch