EconSouth (First Quarter 1999)

Recent events and trends from the six states of the Sixth Federal Reserve District
" The northern and metropolitan areas of the state continue to grow at rates comparable to the region and nation, while the rest of the state remains slow.
" The northern and metropolitan areas of the state continue to grow at rates comparable to the region and nation, while the rest of the state remains slow.
" Although some industries in the state are still enjoying expansions, the apparel assembly and pulp and paper industries continue to languish because of overseas competition and lower prices and demand, respectively.

" Florida's economy remains strong, but there are significant concerns over recent developments in Latin America since that region is one of the state's largest trading partners.
" Tourist traffic from Latin America during the Christmas holidays was disappointing to some destinations in Florida, and concerns for the future have increased. At the same time, though, bookings primarily from domestic sources are up, and on balance winter tourist traffic looks quite good.
" The cruise industry continues to operate at high booking rates even with its recent expansion of capacity in the state.
" Labor market tightness remains an issue in metropolitan areas in the central and northeastern parts of the state. Anecdotal accounts suggest that some firms have found Jacksonville's tight labor supply a factor in relocation decisions.

" At the end of 1998, Georgia was growing in line with regional and national averages.
" The surge that began in the winter of 1998 in the Atlanta area has abated, and the city is now performing in line with the rest of the state.
" On a year-over-year basis, manufacturing employment growth in the state remains positive, in contrast to the contraction seen overall in the region and the nation. Georgia's positive manufacturing growth can be attributed in part to the fact that the weak apparel industry accounts for only a comparatively small share of the state's manufacturing mix.
" Expansion in the service sector provided the bulk of the state's strength.

" Louisiana's economy continues to suffer from low oil prices, which have led to substantial reductions in employment in the relatively high-wage drilling portion of the oil industry and related support activities. In New Orleans many oil-related firms have either laid off workers or consolidated operations, moving employment outside the state.
" In addition to causing employment dislocations, low oil prices have constrained state tax revenues by lowering overall economic activity and reducing severance tax income generated by the oil industry.
" Shipbuilding continues at a strong pace although the merger of Newport News Shipbuilding and Avondale Industries has raised some concerns for the future.

" Mississippi's economic performance continues to be determined largely by gambling-industry developments, which have strengthened local economies on the Gulf and Mississippi River while other areas have remained relatively weak. The state ended 1998 with job growth of less than 1 percent year over year.
" Construction employment is strong partly because of casino-related projects and a temporary boost from repairs associated with Hurricane Georges.
" Employment conditions remain varied, with low rates of unemployment along the Gulf and higher rates in northern and central portions of the state.

" Tennessee's economy appeared rather weak at the end of 1998 mostly as a result of temporary weakness in the manufacturing sector, particularly around Nashville. For Nashville, however, much of this weakness is offset by booming construction.
" Manufacturing is contracting relatively fast — more than in either the region or the nation. Apparel industry losses, which are probably permanent, and auto industry weakness, which is probably temporary, account for much of this contraction.
" Despite the apparent weakness in manufacturing, the long-term outlook for this sector is good. The auto industry continues to move toward an area centered on Tennessee, and existing auto assemblers in the area are switching to or adding production of car models that are currently popular.
Compiled by the regional section of the Atlanta Fed's research department

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