All is not perfect in Jacksonville’s economy, but the overall outlook is “generally positive” as 2015 comes to an end, according to the University of North Florida’s Local Economic Indicators Project.
The unemployment rate in the area continues to drop, but that is at least partly due to workers leaving the labor force, according to the organization’s quarterly newsletter, LEIPLINE.
Consumer prices have also been dropping in recent months, which sounds like good news but also indicates that demand is weak, the newsletter said.
Still, UNF economist Paul Mason said his outlook is optimistic.
“There’s a lot of negative stuff out there but I happen to believe we’re generally heading in the right direction,” Mason said.
The unemployment rate for the Jacksonville area fell below 5 percent for the first time in seven years in October. LEIP is projecting unemployment to remain below 5 percent through January, which should be a positive sign for the economy.
“Unfortunately, the same influences that have plagued the national labor force have occurred in Jacksonville as well,” LEIPLINE said, referring to a decline in the size of the labor force.
When people get discouraged and stop actively looking for work, they are considered to be out of the labor force and are not counted among the unemployed.
“The same issues that high school and college graduates are having elsewhere in the country breaking into the job market are problematic for Jacksonville students too. While the unemployment rate numbers look positive and the trend is moving towards full employment, the reason why is not optimal,” LEIPLINE said.
LEIP’s consumer price index for the Jacksonville area fell by 0.8 percent in the four months through October, which is good news for consumers.
“It was very clear that declining oil and gasoline prices were the primary drivers, but food prices also fell along with several commodity prices and those for services,” LEIPLINE said.
However, the drop in prices is a negative signal for the health of the economy.
“Despite perceived improvements in the labor markets and leading indicators which suggest that the local economy is improving, prices are declining in many markets as consumers withhold spending and companies discount to reduce inventories,” the newsletter said.
The overall inflation rate through the first 10 months of the year, as gauged by the CPI, is still higher than most recent years at about 1.8 percent, LEIP said. A spike in oil prices early in the year caused inflation to rise.
Economic conditions could improve during the holiday season. LEIP’s index of leading economic indicators for the Jacksonville area has been up in nine of the last 12 months.
“The leading economic indicators suggest that this will be a very merry Christmas for retailers, although the trend towards more Internet purchases and less in stores will accelerate this year again,” LEIPLINE said.
Among the indicators, “building permits are at levels three times what they were during the Great Recession with local stocks up substantially in October and initial claims for unemployment insurance in the 2,500 to 3,000 range, as opposed to over 10,000 in the depths of the recession,” it said.
While the indicators are pointing up, the economy is not performing as well as it could be, according to LEIPLINE.
“Perhaps it is the natural tendency for economists to be inclined towards the more pessimistic side, or the unrest internationally due to terrorism and weak international economies temper our support for the bright side, but the U.S. economy and those throughout the world very simply should be growing faster than they are,” it said.
“Technological advances and worker productivity are well beyond historical norms and consumers are no less willing to improve their standards of living from hard work, or at least considerable effort,” LEIPLINE said. “Yet the international atmosphere, the U.S. outlook, and the local perspective are not as positive as they could be. We hope for more in 2016 as we approach this holiest of seasons, with the promise that economic prosperity will improve for most in 2016.”