EconSouth (Third Quarter 2008)

Related Links
REIN (Regional Economic Information Network) Data and Analysis
Compass Bank Business Leaders Confidence Index for Alabamaoff-site image
Florida Consumer Confidence Index (University of Florida)off-site image
"Examination of the Development of Liquefied Natural Gas on the Gulf of Mexico"off-site image
University of Southern Mississippi July 2008 economic outlook conferenceoff-site image
Middle Tennessee Consumer Confidence Reportsoff-site image
The State of the States

Recent events and trends from the six states of the Sixth Federal Reserve District

  • For the third quarter of 2008, the Compass Bank Business Leaders Confidence Index for Alabama was 42.7, only 0.2 points below its second quarter reading. (A reading above 50 indicates expansion, below 50, contraction.) The bank's economic outlook index declined by 0.9 points to 45.2, almost 19 points below its level from a year earlier. However, declining expectations in both indexes have leveled off during the past few months.
 
  • In early May, Atlanta-based Home Depot broke ground on a new distribution center in McCalla. The $33 million center, targeted for completion by the end of 2008, will initially employ 214 people. The 657,000 square foot facility is being built on a 70-acre site in Jefferson Metropolitan Park. Home Depot expects that the facility will help improve service and efficiency at its Southeastern U.S. stores.

  • The Florida consumer confidence index rose to 60 in July from its all-time low of 59 in June, signaling that Floridians may be looking ahead to when the housing market picks up. "Consumers are quite gloomy about their current finances, but expect some change over the next year," said Chris McCarty, survey research director for the University of Florida's Bureau of Economic and Business Research. "Floridians may be looking ahead to a bottoming out of home prices, which may come sooner than expected, and a pickup in sales, which will probably not occur until next year."

  • In May, Gov. Charlie Crist announced that Piper Aircraft plans to keep its headquarters in Vero Beach and further expand manufacturing operations there. By 2012, Piper plans to add more than 450 jobs to the 960 already on the payrolls.

  • Manufacturing activity in Georgia remained unchanged in July, according to the Econometric Center at Kennesaw State University. The center's Georgia Purchasing Managers Index (PMI)—a snapshot of the state's manufacturing sector—was 49.6, the same level as in June. (A reading above 50 indicates expanding manufacturing activity, below 50, contracting activity.) The reading indicates some stability but also reflects a weakness in manufacturing that began in December 2007. "The manufacturing sector doesn't see a long-term sustainable trend," said Don Sabbarese, the center's director.

  • In May, Korea-based Kumho Tire Co., one of the world's top 10 tire manufacturers, broke ground near Macon on its sixth overseas plant. The $225 million, 5.7 million square foot facility, slated for completion by the end of 2009, is expected to provide more than 450 jobs and initially manufacture more than 2 million tires per year for original and replacement equipment markets in the United States.

  • David Dismukes, associate executive director of Louisiana State University's Center for Energy Studies, recently published a study examining the role, importance, and development of liquefied natural gas (LNG) regasification facilities along the Gulf of Mexico. The study finds that the Gulf is probably the best location in the United States for the development of LNG regasification facilities because the region has a large energy infrastructure that can support and serve as a market for LNG.

  • In June, Zagis USA broke ground on the first of two textile mills in Jefferson Davis Parish. The company will invest $75 million in a two-phase cotton spinning project that will bring 160 new jobs to the area. The average annual wage will be $31,000 plus benefits. The first phase is estimated to be completed by late fall of 2008, and the second is projected to begin in early 2009.

  • At an economic outlook conference in July sponsored by the Bureau of Business and Economic Research of the University of Southern Mississippi, William Gunther, the bureau's director, reported that Mississippi's economy tends to parallel the U.S. economy and that weak job growth will likely continue for the rest of 2008. He expects job losses in manufacturing, retail trade, and nonresidential construction and only marginal gains in health care and in business and professional services in the second half of the year. For 2008 as a whole, he believes total employment growth will likely be negative.

  • PK USA Inc., an automotive parts supplier, announced earlier this year that it will open a new stamping and welding assembly plant in Senatobia. The 200,000 square foot facility will employ 150 people when it begins production in 2010. The plant will supply the Toyota plant now under construction in Blue Springs as well as other Japanese manufacturers and suppliers in the state.

  • A recent Middle Tennessee State University survey of local consumers showed that confidence has fallen to its lowest level since the beginning of 2003, when the previous year's news reports featured corporate accounting scandals and uncertainty about the war in Iraq. Timothy Graeff, director of the university's Office of Consumer Research, noted in the report that high gasoline prices are affecting local consumers' mindset. "Even though the local economy is healthy, consumers . . . have become increasingly pessimistic about the current [and] future economy."

  • In July, Volkswagen AG picked Chattanooga as the site for its new U.S. auto plant. The plant is expected to employ 2,000 workers and have the capacity to produce 150,000 cars a year when it begins production in 2011. University of Tennessee economist Bill Fox said spinoff jobs in Tennessee and neighboring corners of Georgia and Alabama could total more than 10,000.
This information was compiled by Shalini Patel, an economic analyst at the Atlanta Fed.
Illustrations by Jay Rogers