Jacksonville’s unemployment rate could fall below 5 percent this spring for the first time in seven years, and other economic indicators are also pointing up, according to the University of North Florida’s Local Economic Indicators Project.
The economic data group’s latest quarterly newsletter, LEIPLINE, is forecasting the jobless rate to fall below 5 percent perhaps as early as May, which would be the first time unemployment fell that low since the 2007-09 recession.
“The end of 2014 and the beginning of 2015 look quite positive for movements below 5 percent by the middle of the year,” LEIPLINE said.
That suggests better employment opportunities in the Jacksonville area, but there also is some caution in the labor market outlook.
“The discouraged worker issue and the numbers of individuals leaving the work force is evident locally, too,” LEIPLINE said.
When long-term unemployed people become discouraged and stop actively looking for a job, they are no longer counted as unemployed in government surveys. That can distort the data.
“If people leaving the workforce are predominantly the unemployed, then it artificially makes the unemployment rate look lower,” said UNF economist Paul Mason.
The most recent data for Jacksonville, as seasonally adjusted by LEIP, showed the metropolitan area’s unemployment rate at 5.38 percent in December.
Mason said there is no data available on how many discouraged workers there may be in the area.
LEIP’s index of leading economic indicators for Northeast Florida was down in December but was “up significantly” overall in 2014. “It was up three points last year, which is way above normal,” Mason said.
The strong economic indicators point to a strengthening economy in the spring, LEIPLINE said.
LEIPLINE said building permits have been “pretty stagnant” and local stock prices are lagging behind major national stock indexes. However, initial claims for unemployment insurance are down and help-wanted advertisements are rising.
LEIP’s consumer price index showed a lower inflation rate for the Jacksonville area (0.15 percent) than the national rate (1.3 percent) in 2014.
“However, December and January generated small and moderate price gains respectively, due to housing recoveries and escalations in used cars and trucks prices,” LEIPLINE said.
LEIP is forecasting an inflation rate of 1.1 percent for the Jacksonville area for the first quarter this year, based on current trends.
“Whether this continues and comes to fruition will depend on whether the Fed raises its target interest rate and whether doing so causes improved use of funds and bank loans that promote growth or rather, they maintain the status quo. Clearly our forecasts suspect the latter,” LEIPLINE said.
The newsletter said the recent spike in gasoline prices, if it continues, could impact the forecast. The movement of gasoline prices seems to be impacting the national economy.
“We reiterate this quarter that many economists have concluded that oil and gasoline prices are not as important as they once were, but it is difficult not to recognize that the acceleration of growth over the last seven months (nationally) has corresponded to declining energy prices with significant correlations, and that more recent growth may have slowed in anticipation of the gasoline price increases that we have seen over the last few weeks predicated on consumer beliefs that the gasoline gravy train was screeching to a halt,” it said.
Of course, the movement of gasoline prices should also impact the Northeast Florida economy.
“The declining oil and gasoline prices through the end of 2014 and into February of this year have helped keep prices down in general and likely bolstered consumer confidence in the state and locally,” LEIPLINE said.
“Stock prices, however, have been stagnant and unemployment has fallen, but more slowly than would be optimal to return us succinctly to full employment,” it said.
“However, most trends are in the desirable direction as 2015 is getting started and outside of concerns over international turmoil and weakness, the U.S. economy and the Jacksonville economy both seem to be advancing nicely.”
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