Transcript Document

Estimation and Forecasting of Retail Sales in Florida:
An Update
By:
Tony Villamil
The Washington Economics Group, Inc.
Florida Retail Federation Annual Meeting
Retailing: Sustaining Your Sails!
La Playa Resort, Naples, Florida
November 18, 2008
External Macroeconomic Drivers of Economic Activity and
Income in Florida: A Framework
FLORIDA ECONOMIC AND INCOME GROWTH DRIVEN BY:
EXTERNAL DRIVERS
2009 Florida Outlook
Business Climate
Tendency
Steady
US Econ/Fin Markets
Recession
Global Economy
Recession
US Economic Drivers of Florida
2005
2006
2007
2008
2009F
RiskF
1. Economic Growth1
( % Real GDP)
3.1
2.9
2.0
1.0
-1.0

2. Inflation2
( % Core CPI/U)
2.2
2.6
2.4
2.6
1.5
--
3. Fed Funds Rate (Avg)3
3.2
4.9
5.0
2.3
1.0
--
4. Unemployment Rate4 (%)
5.1
4.6
4.6
6.8
7.5

Indicator
Source: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve and Forecast (F) by
The Washington Economics Group, Inc.
Notes: 1Data for 2008 is based on IIIQ-08 vs. IIIQ-07. 2Data based on the first half of 2008. 3Annual
Average, 2008 is based up to Oct YTD. 4Data for 2008 is based on Sep 2008.
Global Economic Drivers of Florida
Region/Country
( GDP, %)
2005
2006
2007
2008
2009F
Developed Economies
Euro Area
Japan
U.K.
1.6
1.9
2.1
2.8
2.4
2.8
2.6
2.0
3.0
1.3
0.7
1.0
0.2
0.5
-0.1
Emerging Countries
China
India
10.4
9.1
12.0
10.0
12.0
9.3
9.7
8.0
7.0
7.4
Latin American Region
Brazil
Mexico
3.0
3.2
3.7
4.8
5.4
3.2
4.8
2.5
4.0
2.5
Source: IMF, Oct 2008 and United Nations ECLAC.
Sensitivity of Florida Retail Sales
• Population and per-capita income growth accounts for a
significant 87 percent of the expected change in overall
retail sales
• Consumer expectation and month of the year account for a
12 percent change in retail sales
• The remaining 1 percent change in retail sales can be
attributed to random factors, not accounted by the model
Forecast for Retail Sales in 2009, Adjusted for Inflation and
Broken Down by Principal Product and Services Sectors
Sector
Non-Durables
Total Retail Sales
($ Million)
Change from 2008
(Inflation Adjusted %)
$100,522
1.50%
Durables
29,373
3.0%
Tourism/Recreation
68,596
1.32%
Business Related
70,822
4.95%
Automobiles and Accessories
65,633
10.0%
Building Related
23,792
6.0%
$358,918
2.0%
Total
Source: Forecast Model, The Washington Economics Group, Inc.
Statistical Analysis
Indicators of Retail Sales
Florida Consumer Confidence Index:
A Slight Recovery in 2009
120
100
96
89
90
89
80
77
80
60
60
40
20
0
2003
2004
2005
2006
2007
2008
2009F
Source: University of Florida BEBR and Forecast (F) by The Washington Economics Group,
Inc. Data is based on Dec observations of each year. 2008 is based on Oct data.
$ Crude Oil/Barrel
$100.0
$91.7
$90.0
$80.0
$70.0
$59.4
$60.0
$50.0
$40.0
$65.1
$62.4
$70.0
$43.3
$32.2
$30.0
$20.0
$10.0
$0.0
2003
2004
2005
2006
2007
2008
2009F
Source: Energy Information Administration (EIA) and Forecast (F) by The Washington Economics
Group, Inc. Data is based on Dec observations of each year. 2008 is based on Nov data.
Florida Single-Family Median Home Prices
$260,000
$248,300
$235,100
$240,000
$223,600
$220,000
$196,400
$200,000
$182,400
$190,000
$180,000
$160,000
$158,400
$140,000
$120,000
$100,000
2003
2004
2005
2006
2007
2008
2009F
Source: Florida Association of Realtors and Forecast (F) by The Washington Economics Group,
Inc. Data is based on Dec observations of each year. 2008 is based on Sep YTD data.
Florida Unemployment Rate
8.0%
6.8%
7.0%
6.5%
6.0%
5.0%
4.5%
4.5%
4.2%
4.0%
3.2%
3.3%
2005
2006
3.0%
2.0%
2003
2004
2007
2008
2009F
Source: Florida Agency for Workforce Innovation and Forecast (F) by The Washington Economics
Group, Inc. Data is based on Dec observations of each year. 2008 is based on Sep data.
Florida Taxable Sales:
A Modest Increase for 2009
$28.0
$26.9
$27.0
$25.9
$26.0
$25.5
$24.5
$25.0
$23.8
$24.0
$22.6
$23.0
$22.0
$21.7
$21.0
$20.0
2003
2004
2005
2006
2007
2008
2009F
Source: Florida Economic and Demographic Research Database and Forecast (F) by The
Washington Economics Group, Inc. Data is based on Aug observations of each year.
$300.0
11.0%
$280.0
10.0%
$260.0
9.0%
$240.0
8.0%
$220.0
7.0%
$200.0
6.0%
$180.0
5.0%
$160.0
4.0%
$140.0
3.0%
$120.0
2.0%
$100.0
1.0%
2003
2004
2005
2006
Source: University of Central Florida (UCF), Oct 2008 Forecast.
2007
2008
Annual Growth
$ Billions
Florida Growth and Total Retail Sales
Florida Non-Agricultural Employment
5.0%
4.0%
% Change from Previous Period
4.0%
3.4%
3.0%
2.6%
2.0%
1.1%
1.0%
0.5%
0.0%
-1.0%
-1.5%
-2.0%
2003
2004
2005
2006
2007
2008
Source: Florida Agency for Workforce Innovation. Data is based on December observation of
each year. 2008 growth is based on Sep vs. Sep 2007.
Florida Retail Trade Employment
4.0%
% Change from Previous Period
3.1%
3.4%
3.0%
2.0%
1.0%
1.3%
0.9%
0.0%
-0.1%
-1.0%
-2.0%
-2.4%
-3.0%
2003
2004
2005
2006
2007
2008
Source: Florida Agency for Workforce Innovation. Data is based on December observation of each
year. 2008 growth is based on Sep vs. Sep 2007.
Concluding Observations
• A modest recovery in Retail Sales expected in 2009, from
the low levels experienced in 2008
• It is unlikely that total Retail Sales will reach 2004 levels
next year, but a recovery is likely to gather momentum in
the last quarter of 2009
• Monetary and fiscal policies are highly stimulative of an
economic recovery late in 2009
• Financial federal package now geared to support consumer
credit
The Washington Economics Group, Inc.
2655 LeJeune Road, Suite 608
Coral Gables, Florida 33134
Phone: 305-461-3811
www.weg.com
[email protected]