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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.


March 3, 2015

Tiny Bubbles in Alabama

Do you like to blow bubbles when you're chewing gum? I do. I recently discovered that bubbles are not just fun to blow when you're chewing gum—they can also be a fun and interesting way to visualize data. Yes, I said data. At the Atlanta Fed, we often use bubble charts to track and analyze certain data series. It is particularly helpful when we compare two bubble charts with the same information from different points in time.

In the charts below, which focus on Alabama, each bubble provides a static representation of a given value while also providing comparative information to other industries. The bubble size in these charts illustrates the most recent three-month average of jobs in that industry. The y (vertical) axis shows the three-month average annualized (or short term) job growth, and the x (horizontal) axis shows year-over-year (or long-term) job growth.

The chart is divided into four quadrants. A bubble in the upper-right quadrant (expanding) indicates positive movement in employment (both short- and long-term measures are positive), whereas the lower-left quadrant (contracting) indicates both measures are negative. The upper-left quadrant (improving) indicates the three-month measure is positive, but we're not seeing positive movement year over year. Lastly, the lower-right quadrant (slipping) is positive year over year, but the three-month measure is negative.

As you can see in the first chart, Alabama's leisure and hospitality employment in December 2013 was in the expanding quadrant. We interpret that as this sector has been making gains over the short and long run. This gain stands in contrast to the information sector, which contracted during both the short and long term, putting it firmly in the bottom-left quadrant.

alabama-momentum

Now, let's take a look at how some of Alabama's industries are doing. In December 2014, the leisure and hospitality sector was still expanding (gaining 8,800 jobs). According to the University of Alabama's Center for Business and Economic Research (CBER), the increase in leisure and hospitality is the result of staffing in food services and drinking places (restaurants, for example). CBER's Ahmad Ijaz said, "Restaurants are adding jobs all across the country."

The construction sector is in an even better position, moving from a contraction in December 2013 to expansion a year later. The Birmingham Business Journal, in an article from January 2015, said "Alabama is ranked eighth among the 50 states and the District of Columbia in construction jobs added." Likewise, the Alabama Department of Labor reported that Alabama "employment in the construction sector is at its highest point since November 2010."

Finally, a look at the manufacturing industry in Alabama also showed notable improvements. In 2013, it seemed like manufacturing employment was easing into the "slipping" quadrant, indicating a short-run slowdown. But 2014 saw it move firmly into the expanding quadrant. CBER's Ijaz tells us that this is the result of the automotive industry adding jobs from October 2013 to October 2014. He said that Alabama is one of the few states adding jobs in this sector. In September 2014, AL.com reported that Alabama's auto industry was projected to grow 2 percent in 2014 while the rest of the U.S. auto industry would contract about 4 percent.

alabama-momentum-2

So now that we've scrutinized past data, what are Alabama's employment projections for 2015? According to CBER's latest forecast, Alabama is expected to see stronger growth in employment in 2015 overall. I look forward to comparing bubble charts later in the year. In the meantime, I think I'll grab a piece (or two) of gum.

By Susan Remy, a Regional Economic Information Network analyst at the Birmingham Branch of the Atlanta Fed

September 9, 2014

Small Business Lending in the Sunshine State

No doubt, the lending environment has changed since 2007. Local bankers from the South Florida market discussed some of those changes at a roundtable event held last month at the Miami Branch of the Atlanta Fed. The discussion focused on small business lending activity and how the outlook and behavior of small business owners have evolved since the recession.

The bankers said they have a strong appetite for what they termed "qualified" small business loans and noted that they were competing against each other for good opportunities. This environment has helped put pressure on financial institutions to provide competitive loan terms for small business owners seeking credit. Most of the banks indicated that small business lending was part of a diversification strategy and an important component of their business. In a quarterly senior loan officer opinion survey conducted by the Federal Reserve Board in the second quarter of 2014, loan officers reported easing lending standards and some improvement in small business loan demand relative to a year before (see the chart).

Senior_loanofficers

The roundtable attendees agreed with the survey's findings and noted that the pool of qualified borrowers is currently limited but may expand as banks continue to review their underwriting standards in an improving economic environment.

Although all of the participating bankers were actively engaged in making small business loans, they did indicate that businesses were generally hesitant to take on additional debt and in general were behaving very conservatively. In discussing why business owners were taking on less risk, it was noted that the effects of the recession were still fresh, and most of the bankers felt that uncertainty about the future weighed on the minds of business owners. In addition, findings from the Atlanta Fed's survey of business inflation expectations indicate that business activity for smaller companies is improving but remains below normal levels (see the chart). One banker noted that rising interest rates would indicate to business owners that the economy was strengthening and that rising rates may, in fact, prompt further borrowing.

Percent_abovebelow

Credit qualification often ultimately comes down to the fundamentals. From a credit perspective, the bankers indicated that they heavily rely on the "five C's" of credit to help evaluate loan applicants: character, capacity, credit, collateral, and capital. The roundtable participants described "character" as one of the most important variables when they consider a request. Companies that weathered the recession were viewed more favorably because it demonstrated the ability to manage a business through difficult times. An owner who has personal credit issues will generally imply potential problems in managing the financial aspect of a business. The bankers cited adequate cash flow and a good balance sheet as important credit qualifications. The lenders noted that they also analyze how businesses position their balance sheets and expenses incurred by the company not related to the business.

Overall, the sentiment among the bankers at the meeting was positive, and for the remainder of the year, they expect continued improvement in lending to small businesses.

By Karen Gilmore, a vice president and the regional executive at the Atlanta Fed's Miami Branch, and Marycela Diaz-Unzalu, a Regional Economic Information Network analyst, also at the Miami Branch

May 22, 2014

Are We There Yet?

If you’ve been reading the U.S. Bureau of Labor Statistics’ monthly Regional and State Employment and Unemployment press releases lately (and really, who hasn’t?), you may have noticed that Florida has been mentioned as one of the states with the fastest payroll growth. (In April, Florida had the third-largest payroll gain of any state in the nation, adding 34,000 payrolls across the state; this gain trailed only Texas, which added 64,100, and California, which gained 56,100 payrolls.) Indeed, during the last few months, the state’s payroll growth seems to have shifted into the next gear (see the chart).

Florida's Monthly Average Payroll Growth for Selected Time Periods


Florida has added just about 100,000 payrolls from January through April (97,900, to be exact), which seemed like a nice even number for an economic analyst to tear apart. Almost a third of Florida’s new payrolls so far in 2014 have come in the leisure and hospitality sector (see the chart). The professional and business services sector accounts for a little more than another quarter of the year-to-date job gains.

Sector Distribution of Florida's New Payrolls, January-April 2014 (SA, Thousands)


But still, a good bit left to go...
However, although the pace of payroll growth appears to be picking up for the state (and for the entire Sixth District as well; more on that shortly), in terms of the number of jobs there’s still quite a ways to go just to get back to where the state was prior to the recession. Florida’s payrolls peaked in March 2007 at just over 8 million; by December 2009, that figure was down to about 7.1 million. Incorporating April’s 34,000 new payrolls, the state sits at just shy of 7.8 million payrolls (see the chart).

Total Nonagricultural Payrolls: Florida (left) and Sixth District (right)


Between Florida’s last peak in payrolls and the level in April 2014, the state’s payroll gap is 274,000. Coincidentally, with eight months left in this year, if Florida’s payroll growth for the rest of 2014 continues at or slightly better than April’s pace, the state could ring in 2015 with a new level of peak employment.

For the Sixth District as a whole, the region is still down 444,000 payrolls from peak employment in March 2007, when the District had about 20.1 million payrolls. If April’s pace of aggregate District payroll growth (an increase of 62,400) held for the remaining eight months of the year, the Sixth District would also have a new level of peak employment by New Year’s Day.

Other highlights of the state employment report
Sixth District states added 62,400 payrolls during April, with 34,000 of those coming from Florida. Georgia had the second-largest gain within the Sixth District by adding 14,600 payrolls. Louisiana and Mississippi each added just under 5,000 payrolls (4,700 and 4,900, respectively), with Mississippi seeing its second month, with more than 4,000 jobs added each month since the U.S. Census surge in employment in 2010. Tennessee added 2,400 new payrolls, and Alabama saw 1,800 new payrolls.

The Sixth District aggregate unemployment rate ticked down to 6.4 percent in April, a result of declines in Florida, Mississippi, and Tennessee. Rates of unemployment stayed the same in Georgia (7.0 percent) and Louisiana (4.5 percent) and ticked up in Alabama (from 6.7 percent to 6.9 percent; see the chart).

Unemployment Rates for Sixth District States, and Sixth District Aggregate


The next regional and state employment and unemployment report will be released Friday, June 20.

Photo of Mark CarterBy Mark Carter, a senior economic analyst in the Atlanta Fed’s research department


April 29, 2014

Is the Southeast Poised for Tourism Growth?

The Atlanta Fed's Travel and Tourism Advisory Council met at the Miami Branch for the first time this year on April 17. Overall, council members were enthusiastic about economic activity, and its benefits for the tourism sector, in the Southeast.

Georgia and Alabama bounced back from harsh weather conditions in January and February. The outlook for the next three months is positive, with contacts reporting a strong number of bookings and ticket sales. Florida's tourism benefited from the winter weather with travelers seeking warm weather or extending stays as a result of cancelled flights. Fort Lauderdale, in particular, indicated record numbers in February and March.

The Southeast experienced an increase in international tourist activity in 2013, primarily from Latin America and Europe. Participants noted domestic travelers were travel fatigued and are staying closer to home. Consumer spending increased from a year ago, not only in hotel and food expenditures but in retail stores as well. The increase in spending came primarily from luxury restaurants and hotels.

On the horizon for regional travel and tourism
The council discussed the increase in capital expenditures across the region, reporting heavy construction activity in new hotels, sports venues, and other attractions in addition to renovations of restaurants, hotels, and convention centers.

Technology enhancements continue to significantly affect the industry and are being implemented across many segments of the industry. For example, customers can now complete ticket sales for theme parks, sporting events, and other entertainment events as well as reservations for dinner or special services such as spa treatments prior to traveling. Travelers can electronically handle requests for food orders, hotel check-in, beach chair reservations, and maintenance requests once they have reached their destination. (Don't be surprised to find yourself handed an iPad upon arrival at your hotel to facilitate check-ins and any other needs during your stay.)

Tourism markets expand
Interestingly, the council indicated that families are using children's sporting events—like traveling little leagues—as their family vacation. In response to this growing market, the industry is developing special venues and events for these groups to include family- and sports-oriented activities.

The state of Florida is promoting itself as a destination for medical treatment as a way to expand its customer travel industry. The state is proposing legislation to require VISIT FLORIDA, the State's official marketing corporation, to market Florida as a medical destination. Business contacts in the health care field are also heavily marketing health care in the state to countries with an underdeveloped health care sector.

All that said, the travel and tourism sector looks promising in the near term, and new industry developments should enhance the vacation experience for those about to visit the Southeast.

By Marycela Diaz-Unzalu, an economic and financial education specialist in the Miami Branch of the Atlanta Fed


March 3, 2015

Tiny Bubbles in Alabama

Do you like to blow bubbles when you're chewing gum? I do. I recently discovered that bubbles are not just fun to blow when you're chewing gum—they can also be a fun and interesting way to visualize data. Yes, I said data. At the Atlanta Fed, we often use bubble charts to track and analyze certain data series. It is particularly helpful when we compare two bubble charts with the same information from different points in time.

In the charts below, which focus on Alabama, each bubble provides a static representation of a given value while also providing comparative information to other industries. The bubble size in these charts illustrates the most recent three-month average of jobs in that industry. The y (vertical) axis shows the three-month average annualized (or short term) job growth, and the x (horizontal) axis shows year-over-year (or long-term) job growth.

The chart is divided into four quadrants. A bubble in the upper-right quadrant (expanding) indicates positive movement in employment (both short- and long-term measures are positive), whereas the lower-left quadrant (contracting) indicates both measures are negative. The upper-left quadrant (improving) indicates the three-month measure is positive, but we're not seeing positive movement year over year. Lastly, the lower-right quadrant (slipping) is positive year over year, but the three-month measure is negative.

As you can see in the first chart, Alabama's leisure and hospitality employment in December 2013 was in the expanding quadrant. We interpret that as this sector has been making gains over the short and long run. This gain stands in contrast to the information sector, which contracted during both the short and long term, putting it firmly in the bottom-left quadrant.

alabama-momentum

Now, let's take a look at how some of Alabama's industries are doing. In December 2014, the leisure and hospitality sector was still expanding (gaining 8,800 jobs). According to the University of Alabama's Center for Business and Economic Research (CBER), the increase in leisure and hospitality is the result of staffing in food services and drinking places (restaurants, for example). CBER's Ahmad Ijaz said, "Restaurants are adding jobs all across the country."

The construction sector is in an even better position, moving from a contraction in December 2013 to expansion a year later. The Birmingham Business Journal, in an article from January 2015, said "Alabama is ranked eighth among the 50 states and the District of Columbia in construction jobs added." Likewise, the Alabama Department of Labor reported that Alabama "employment in the construction sector is at its highest point since November 2010."

Finally, a look at the manufacturing industry in Alabama also showed notable improvements. In 2013, it seemed like manufacturing employment was easing into the "slipping" quadrant, indicating a short-run slowdown. But 2014 saw it move firmly into the expanding quadrant. CBER's Ijaz tells us that this is the result of the automotive industry adding jobs from October 2013 to October 2014. He said that Alabama is one of the few states adding jobs in this sector. In September 2014, AL.com reported that Alabama's auto industry was projected to grow 2 percent in 2014 while the rest of the U.S. auto industry would contract about 4 percent.

alabama-momentum-2

So now that we've scrutinized past data, what are Alabama's employment projections for 2015? According to CBER's latest forecast, Alabama is expected to see stronger growth in employment in 2015 overall. I look forward to comparing bubble charts later in the year. In the meantime, I think I'll grab a piece (or two) of gum.

By Susan Remy, a Regional Economic Information Network analyst at the Birmingham Branch of the Atlanta Fed

September 9, 2014

Small Business Lending in the Sunshine State

No doubt, the lending environment has changed since 2007. Local bankers from the South Florida market discussed some of those changes at a roundtable event held last month at the Miami Branch of the Atlanta Fed. The discussion focused on small business lending activity and how the outlook and behavior of small business owners have evolved since the recession.

The bankers said they have a strong appetite for what they termed "qualified" small business loans and noted that they were competing against each other for good opportunities. This environment has helped put pressure on financial institutions to provide competitive loan terms for small business owners seeking credit. Most of the banks indicated that small business lending was part of a diversification strategy and an important component of their business. In a quarterly senior loan officer opinion survey conducted by the Federal Reserve Board in the second quarter of 2014, loan officers reported easing lending standards and some improvement in small business loan demand relative to a year before (see the chart).

Senior_loanofficers

The roundtable attendees agreed with the survey's findings and noted that the pool of qualified borrowers is currently limited but may expand as banks continue to review their underwriting standards in an improving economic environment.

Although all of the participating bankers were actively engaged in making small business loans, they did indicate that businesses were generally hesitant to take on additional debt and in general were behaving very conservatively. In discussing why business owners were taking on less risk, it was noted that the effects of the recession were still fresh, and most of the bankers felt that uncertainty about the future weighed on the minds of business owners. In addition, findings from the Atlanta Fed's survey of business inflation expectations indicate that business activity for smaller companies is improving but remains below normal levels (see the chart). One banker noted that rising interest rates would indicate to business owners that the economy was strengthening and that rising rates may, in fact, prompt further borrowing.

Percent_abovebelow

Credit qualification often ultimately comes down to the fundamentals. From a credit perspective, the bankers indicated that they heavily rely on the "five C's" of credit to help evaluate loan applicants: character, capacity, credit, collateral, and capital. The roundtable participants described "character" as one of the most important variables when they consider a request. Companies that weathered the recession were viewed more favorably because it demonstrated the ability to manage a business through difficult times. An owner who has personal credit issues will generally imply potential problems in managing the financial aspect of a business. The bankers cited adequate cash flow and a good balance sheet as important credit qualifications. The lenders noted that they also analyze how businesses position their balance sheets and expenses incurred by the company not related to the business.

Overall, the sentiment among the bankers at the meeting was positive, and for the remainder of the year, they expect continued improvement in lending to small businesses.

By Karen Gilmore, a vice president and the regional executive at the Atlanta Fed's Miami Branch, and Marycela Diaz-Unzalu, a Regional Economic Information Network analyst, also at the Miami Branch

May 22, 2014

Are We There Yet?

If you’ve been reading the U.S. Bureau of Labor Statistics’ monthly Regional and State Employment and Unemployment press releases lately (and really, who hasn’t?), you may have noticed that Florida has been mentioned as one of the states with the fastest payroll growth. (In April, Florida had the third-largest payroll gain of any state in the nation, adding 34,000 payrolls across the state; this gain trailed only Texas, which added 64,100, and California, which gained 56,100 payrolls.) Indeed, during the last few months, the state’s payroll growth seems to have shifted into the next gear (see the chart).

Florida's Monthly Average Payroll Growth for Selected Time Periods


Florida has added just about 100,000 payrolls from January through April (97,900, to be exact), which seemed like a nice even number for an economic analyst to tear apart. Almost a third of Florida’s new payrolls so far in 2014 have come in the leisure and hospitality sector (see the chart). The professional and business services sector accounts for a little more than another quarter of the year-to-date job gains.

Sector Distribution of Florida's New Payrolls, January-April 2014 (SA, Thousands)


But still, a good bit left to go...
However, although the pace of payroll growth appears to be picking up for the state (and for the entire Sixth District as well; more on that shortly), in terms of the number of jobs there’s still quite a ways to go just to get back to where the state was prior to the recession. Florida’s payrolls peaked in March 2007 at just over 8 million; by December 2009, that figure was down to about 7.1 million. Incorporating April’s 34,000 new payrolls, the state sits at just shy of 7.8 million payrolls (see the chart).

Total Nonagricultural Payrolls: Florida (left) and Sixth District (right)


Between Florida’s last peak in payrolls and the level in April 2014, the state’s payroll gap is 274,000. Coincidentally, with eight months left in this year, if Florida’s payroll growth for the rest of 2014 continues at or slightly better than April’s pace, the state could ring in 2015 with a new level of peak employment.

For the Sixth District as a whole, the region is still down 444,000 payrolls from peak employment in March 2007, when the District had about 20.1 million payrolls. If April’s pace of aggregate District payroll growth (an increase of 62,400) held for the remaining eight months of the year, the Sixth District would also have a new level of peak employment by New Year’s Day.

Other highlights of the state employment report
Sixth District states added 62,400 payrolls during April, with 34,000 of those coming from Florida. Georgia had the second-largest gain within the Sixth District by adding 14,600 payrolls. Louisiana and Mississippi each added just under 5,000 payrolls (4,700 and 4,900, respectively), with Mississippi seeing its second month, with more than 4,000 jobs added each month since the U.S. Census surge in employment in 2010. Tennessee added 2,400 new payrolls, and Alabama saw 1,800 new payrolls.

The Sixth District aggregate unemployment rate ticked down to 6.4 percent in April, a result of declines in Florida, Mississippi, and Tennessee. Rates of unemployment stayed the same in Georgia (7.0 percent) and Louisiana (4.5 percent) and ticked up in Alabama (from 6.7 percent to 6.9 percent; see the chart).

Unemployment Rates for Sixth District States, and Sixth District Aggregate


The next regional and state employment and unemployment report will be released Friday, June 20.

Photo of Mark CarterBy Mark Carter, a senior economic analyst in the Atlanta Fed’s research department


April 29, 2014

Is the Southeast Poised for Tourism Growth?

The Atlanta Fed's Travel and Tourism Advisory Council met at the Miami Branch for the first time this year on April 17. Overall, council members were enthusiastic about economic activity, and its benefits for the tourism sector, in the Southeast.

Georgia and Alabama bounced back from harsh weather conditions in January and February. The outlook for the next three months is positive, with contacts reporting a strong number of bookings and ticket sales. Florida's tourism benefited from the winter weather with travelers seeking warm weather or extending stays as a result of cancelled flights. Fort Lauderdale, in particular, indicated record numbers in February and March.

The Southeast experienced an increase in international tourist activity in 2013, primarily from Latin America and Europe. Participants noted domestic travelers were travel fatigued and are staying closer to home. Consumer spending increased from a year ago, not only in hotel and food expenditures but in retail stores as well. The increase in spending came primarily from luxury restaurants and hotels.

On the horizon for regional travel and tourism
The council discussed the increase in capital expenditures across the region, reporting heavy construction activity in new hotels, sports venues, and other attractions in addition to renovations of restaurants, hotels, and convention centers.

Technology enhancements continue to significantly affect the industry and are being implemented across many segments of the industry. For example, customers can now complete ticket sales for theme parks, sporting events, and other entertainment events as well as reservations for dinner or special services such as spa treatments prior to traveling. Travelers can electronically handle requests for food orders, hotel check-in, beach chair reservations, and maintenance requests once they have reached their destination. (Don't be surprised to find yourself handed an iPad upon arrival at your hotel to facilitate check-ins and any other needs during your stay.)

Tourism markets expand
Interestingly, the council indicated that families are using children's sporting events—like traveling little leagues—as their family vacation. In response to this growing market, the industry is developing special venues and events for these groups to include family- and sports-oriented activities.

The state of Florida is promoting itself as a destination for medical treatment as a way to expand its customer travel industry. The state is proposing legislation to require VISIT FLORIDA, the State's official marketing corporation, to market Florida as a medical destination. Business contacts in the health care field are also heavily marketing health care in the state to countries with an underdeveloped health care sector.

All that said, the travel and tourism sector looks promising in the near term, and new industry developments should enhance the vacation experience for those about to visit the Southeast.

By Marycela Diaz-Unzalu, an economic and financial education specialist in the Miami Branch of the Atlanta Fed