Southwest Florida Regional Economic Indicators. October 2008

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1 Southwest Florida Regional Economic Indicators October 2008 Regional Economic Research Institute Lutgert College Of Business Phone Florida Gulf Coast University FGCU Blvd. South Fort Myers, FL 33965

2 Table of Contents Introduction... 3 Airport Activity... 4 Chart 1: Regional Airport Arrivals and Departures... 4 Chart 2: RSW Traffic Trend... 5 Chart 3: Sarasota Airport Traffic Trend... 5 Single-Family Building Permits... 6 Chart 4: Lee County... 6 Chart 5: Collier County... 7 Chart 6: Charlotte County... 7 Taxable Sales:... 8 Chart 7: Taxable Sales by County... 8 Chart 8: Lee County Taxable Sales - Change from a Year Earlier... 9 Chart 9: Collier County Taxable Sales - Change from a Year Earlier... 9 Chart 10: Charlotte County Taxable Sales - Change from a Year Earlier Workforce Unemployment Chart 11: Regional Unemployment Chart 12: Coastal County Unemployment Chart 13: Inland County Unemployment Sales of Single Family Existing Homes and Median Sales Price Chart 14: Lee County Chart 15: Collier County Chart 16: Charlotte County Consumer Price Index Chart 17: CPI Index for US, South Region, and Miami-Fort Lauderdale Chart 18: CPI Annual Percentage Change Population Chart 19: Coastal Counties Growth 1990 to Chart 20: Inland County Growth 1990 to Table 1: Projections by County Chart 21: Projections by County Chart 22: Population Distribution Chart 23: Population Distribution Chart 24: Population Distribution

3 Contact List: Dr. Gary Jackson, Director, Regional Economic Research Institute Phone: Ms. Carol Sweeney, Economist, Regional Economic Research Institute Phone: Mr. Jim Breitbach, Technical Support Introduction The global economy has been slowing and we are seeing the impact on the stock and oil markets. The volatility, as well as the lower overall value of stocks, and the rising unemployment rates are expected to reduce overall consumer confidence and reduce spending. There are calls for another tax rebate stimulus program early next year. The Federal Reserve System Open Market Committee lowered the federal funds rate target by 50 basis points to one and one-half percent on October 8, The announcement was coordinated with several other central banks who also responded to the current economic conditions with cuts in interest rates. Lower oil prices and predictions of a slower global economy have helped to moderate the inflationary pressures allowing for more actions on the part of the Federal Reserve to help stabilize the economy. The next Open Market Committee meeting is planned for October 28 and 29, 2008, and I expect that they may again cut the target federal funds rate by as much as one-half of one percent. The Federal Reserve has created six new lending facilities to help increase liquidity in the financial markets. These are historic in terms of markets and organizations supported and include: o o o o o o Term Auction Facility Primary Dealer Credit Facility Term Securities Lending Facility Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility Commercial Paper Funding Facility Money Market Investor Funding Facility Our regional economic indicator charts are showing the impact of the slowdown in the local economy in the form of lower retail sales, high unemployment rates, lower levels of airport passenger traffic, and low permitting levels. September unemployment rose in Charlotte and Lee Counties and fell slightly in Collier, Hendry, and Glades Counties. This slowdown in the regional economy reflects lower housing and construction activity, lower durable goods sales, reduced investment levels, tighter credit requirements, sub-prime loan issues and high foreclosure rates, lower consumer confidence, and higher oil prices. The Regional Economic Research Institute (RERI) is continuing to develop the regional economic database and this report as a way to support its mission and assist the region. We are currently working to add indicators and commentary on the regional tourist activity. The Institute thanks its many partners for assistance in obtaining the data, including the Southwest Florida Regional Planning Council, the Economic Development Organizations of Charlotte, Collier, and Lee Counties, and the county and city permit offices. 3

Airport Activity Airport passenger activity is defined as the sum of arrivals and departures and is shown for Regional Southwest Florida, Sarasota and Naples airports in chart 1.

4 Airport Activity Airport passenger activity is defined as the sum of arrivals and departures and is shown for Regional Southwest Florida, Sarasota and Naples airports in chart 1. Charts 2 and 3 illustrate the monthly seasonality of airport passenger traffic and the changes from year to year. Passenger numbers for Regional Southwest Florida (RSW) and Sarasota (SRQ) are shown on the left vertical axis and the numbers for Naples airport (AFP) are shown on the right vertical axis. Peak activity months are February, March and April during the winter season. Significantly lower activity takes place in the summer months, especially the period of June to September. Regional Southwest Florida (RSW) airport located in Lee County is ranked as one of the fifty busiest airports in the nation. The 2008 passenger activity peaked in March at 1,030,151 as expected and the passenger activity levels have fallen over the slower summer months as shown in Chart 1. The August 2008 passenger level was 448,667, which is approximately eight percent below the August 2007 level, reflecting the slowdown in the regional and national economy and the impact of higher fuel and ticket prices. Sarasota (SRQ) passenger activity was 97,760 in August 2008 or approximately two percent lower than August 2007, as shown in Chart 3. Naples activity in August 2008 was 149, down from 2,527 in August Chart 1: Regional Airport Arrivals and Departures Source: Local Airport Authorities 4

5 Chart 2: RSW Traffic Trend Source: Local Airport Authorities Chart 3: Sarasota Airport Traffic Trend Source: Local Airport Authorities 5

Single-Family Building Permits In September of 2008, permitting in Lee County remains low, falling to 55 permits from 65 in August as shown in Chart 4.

6 Single-Family Building Permits In September of 2008, permitting in Lee County remains low, falling to 55 permits from 65 in August as shown in Chart 4. The new September number lies below the September figure from one year ago of 121. Single-family permits for Collier County increased, from 40 in August to 56 permits in September as shown in Chart 5. This compares to a Collier Single-family permit total of 65 permits in September In Charlotte County, permitting rose from 27 in August to 33 for the month of September, as illustrated in Chart 6. Chart 4: Lee County Source: Local Building and Zoning Departments, including Fort Myers, Cape Coral, and Unincorporated Lee County, Bonita Springs and Fort Myers Beach permits. 6

only. Chart 6: Charlotte County Source: Local Building and

7 Chart 5: Collier County Source: Local Building and Zoning Departments, includes unincorporated Collier County permits only. Chart 6: Charlotte County Source: Local Building and Zoning Departments, includes unincorporated Charlotte County permits only. 7

8 Taxable Sales Taxable sales are reported by the Florida Department of Revenue. We have adjusted the taxable sales charts to show month of collection rather than the reporting month that is issued by the Florida Department of Revenue. This makes July the latest collection month plotted on the following charts. The taxable sales figures are used to track consumer spending, an important component of the regional economy. Chart 7 provides a historical range of average monthly taxable sales for 2000 to 2007 plus the latest 12 months of taxable sales by county. Each county saw taxable sales fall from June to July Chart 8 shows the decline in taxable sales by month from the same month a year earlier for Lee County. Note that the reductions began in December 2006 and grew more negative beginning in April Lee County taxable sales declined 17.6 percent from July 2007 to July Collier County taxable sales from July 2007 to July 2008 declined 16.8 percent, as shown in Chart 9. Charlotte County taxable sales declined 29.2 percent from July 2007 to July 2008 as shown in Chart 10. Hendry County had taxable sales decline by 21.2 percent from July 2007 to July 2008, while Glades County had a decrease of 22.6 percent. The latest taxable sales numbers indicate a continued decline in consumer spending in these uncertain times. Chart 7: Taxable Sales by County Source: Florida Department of Tax Research 8

Chart 9: Collier County Taxable Sales - Change from a

9 Chart 8: Lee County Taxable Sales - Change from a Year Earlier Source: Florida Department of Tax Research Chart 9: Collier County Taxable Sales - Change from a Year Earlier Source: Florida Department of Tax Research 9

Chart 10: Charlotte County Taxable Sales - Change from a Year Earlier Source: Florida Department of Tax Research Workforce Unemployment Unemployment rose in Lee and Charlotte Counties but declined

10 Chart 10: Charlotte County Taxable Sales - Change from a Year Earlier Source: Florida Department of Tax Research Workforce Unemployment Unemployment rose in Lee and Charlotte Counties but declined slightly in Collier, Hendry and Glades Counties in September of 2008, as shown in Chart 11. The increases are due to the slower summer season at a time of slow national and regional economic growth. The national unemployment rate remained steady at 6.1 percent in September but is expected to increase during the later part of this year and potentially the first or second quarter of next year. Charlotte County unemployment rose to 9.5 percent in September from 9.2 percent in August. Collier County unemployment fell slightly from 8.5 percent in August to 8.4 percent in September. Lee County saw the unemployment rate increase slightly from 9.1 percent in August to 9.2 percent in September. Hendry County unemployment was 14.1 percent in September compared to 14.3 percent in August. Glades County unemployment was slightly lower at 8.2 percent in September compared to 8.5 percent for August. Charts 12 and 13 show the unemployment rates for the coastal and inland counties for our region and provide a longer term historical perspective of unemployment rates from 2000 to Unemployment rates above 5.0 percent reflect cyclical unemployment and a slowdown of the economy from long-run trends. Our region has been hit particularly hard due to its dependence on housing and construction in general. 10

11 Chart 11: Regional Unemployment Source; AWI Chart 12: Coastal County Unemployment Source AWI 11

Chart 13: Inland County Unemployment Source AWI Sales of Single Family Existing Homes and Median Sales Price The number of existing single-family homes sold in August 2008 by Realtors increased in

12 Chart 13: Inland County Unemployment Source AWI Sales of Single Family Existing Homes and Median Sales Price The number of existing single-family homes sold in August 2008 by Realtors increased in Collier County, but fell in Lee and Charlotte Counties, when compared to July Lee County sales decreased from 768 in July to 684 in August, as shown in Chart 14. The median sales price for Lee County decreased from $154,900 to $146,900. Collier County sales increased from 188 in July to 195 in August with the median price falling from $302,000 to $260,000 as shown in Chart 15. Charlotte County sales decreased slightly from 200 in July to 176 in August, with the median sales price decreasing from $141,800 to $138,100, as shown in Chart

13 Chart 14: Lee County Source: Florida Association of Realtors Fort Myers Cape Coral MSA Chart 15: Collier County Source: Naples Area Board of Realtors (NABOR) 13

Chart 16: Charlotte County Source: Florida Association of Realtors Punta Gorda, Florida MSA http://media.living.net/statistics/statisticsfull.

14 Chart 16: Charlotte County Source: Florida Association of Realtors Punta Gorda, Florida MSA Consumer Price Index The consumer price index (CPI) is reported for the nation, region, and the Miami-Fort Lauderdale area. The Miami-Fort Lauderdale area CPI is collected every two months and will be more timely than the Tampa area statistics that we have included in earlier reports. Chart 17 provides a summary of the changes observed since 2000 which shows that prices have risen faster in the Miami-Fort Lauderdale area than the nation and region. For the last 12 months ending in August 2008, the CPI for Miami-Fort Lauderdale has increased by 5.8 percent. There is concern that higher inflationary expectations may drive up future prices, costs, and wages. The overall Miami-Fort Lauderdale CPI index for the last 12 months ending August 2008 can be broken down into the following component parts: Food and beverages rose 7.1 percent; Housing rose 4.2 percent; Apparel fell 4.2 percent; Transportation rose 10.9 percent with motor fuel costs rising 34.3 percent; Medical care rose 8.8 percent; Recreation rose 3.7 percent; Education and communication rose 1.0 percent; and Other goods and services rose 6.7 percent. Food, transportation, and medical care costs have risen substantially over the last year. Oil prices appear to have peaked in July and have fallen to lower levels in October. The slowdown in the economy is expected to help moderate overall wage and price increases. Chart 18 shows inflation based on 14

rising 5.8 percent, compared to the South region rising at 5.

15 annual growth rates. The period from August 2007 to August 2008 saw prices for the Miami-Fort Lauderdale area rising 5.8 percent, compared to the South region rising at 5.6 percent and the national CPI rising at 5.4 percent. Chart 17: CPI Index for US, South Region, and Miami-Fort Lauderdale Source: BLS Chart 18: CPI Annual Percentage Change Source: BLS 15

Population A Florida Demographic Estimating Conference was held in July 2008 and the new forecasts are included in this report. Charts 19 and 20 show the historic population growth from 1990 to 2008.

16 Population A Florida Demographic Estimating Conference was held in July 2008 and the new forecasts are included in this report. Charts 19 and 20 show the historic population growth from 1990 to Collier County grew at an average annual growth rate from 1990 to 2008 of 4.6 percent. Lee County almost doubled its population from 1990 to 2008 growing at an annual rate of 3.6 percent. As indicated in Chart 20, Charlotte, Glades, and Hendry Counties had lower average annual rates of population growth between 2.2 and 2.5 percent per year. Table 1 shows the projected population increases for 2008 to 2030 and Chart 21 provides a chart of the population projections for 2008 through Charts 22 through 24 provide the percentages of regional population by County for the years 1990, 2008, and After evaluating the demographic data above, it is clear that we have experienced tremendous growth over the past 30 years and all signs point to the continued long-term growth of the area. Having said that, the growth will not be as large due to a number of factors such as: Build-out suitable land for construction has become scarce Restrictions building codes and hurricane restrictions may limit the expansion of some areas Costs both the conversion of land and construction costs continue to escalate as well as insurance costs upon completion Climate hurricane fears may limit demand to the area particularly in the period of increased activity we appear to be in. Population Tree as the population ages and the baby boomer population passes through the age of retirement, there is a smaller cohort to follow. Chart 19: Coastal Counties Growth 1990 to 2008 Source: Florida EDR: July

Chart 20: Inland County Growth 1990 to 2008 Source: Florida EDR: July 2008.

17 Chart 20: Inland County Growth 1990 to 2008 Source: Florida EDR: July Table 1: Projections by County EDR Demographic Estimating Conference Population Estimates and Projections by County Year Charlotte Collier Lee Hendry Glades , , ,733 40,208 11, , , ,599 40,828 11, , , ,005 46,678 12, , ,872 1,033,510 51,969 13,422 Source: Florida EDR: July

Chart 21: Projections by County Source: Florida EDR: July 2008.

18 Chart 21: Projections by County Source: Florida EDR: July Chart 22: Population Distribution 1990 Population Distribution by County Collier 24% Glades 1% Hendry 4% Charlotte 18% Lee 53% Source: Florida EDR: July

Chart 23: Population Distribution 2008 Source: Florida EDR: July 2008.

19 Chart 23: Population Distribution 2008 Source: Florida EDR: July Chart 24: Population Distribution 2030 Source: Florida EDR: July

Southwest Florida Regional Economic Indicators

Southwest Florida Regional Economic Indicators September Regional Economic Research Institute Lutgert College Of Business Phone 239-59-7319 Florida Gulf Coast University 151 FGCU Blvd. South Fort Myers,