Transcript Center for Business and Economic Research

CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
Alabama Economic Outlook
Personal consumption share at high levels
U.S. Consumption as Percent of GDP
Trend 68.2
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Alabama Economic Outlook
. . . as government share declines
Government Expenditures as Percent of GDP
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Alabama Economic Outlook
Consumers have been spending heavily
Personal Savings as Percent of
Disposable Personal Income
Source: U.S. Department of Commerce.
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Alabama Economic Outlook
Strengths in the Alabama economy in 2009
Construction projects, including ThyssenKrupp, BRAC-related
building, hospital facility expansions, education-related building
Growth in shipbuilding and steel; National Alabama plant start-up
BRAC, national defense, and aerospace projects bringing increasing
contractor presence
Biotechnology and healthcare industry growth
Federal R&D contract spending--$9.95 billion in Alabama in FY2007,
ranking the state 13th
New business at Alabama State Docks
Growing convention and tourism traffic
Population growth continuing
Economic development efforts at diversifying the economy and
creating more and higher paying jobs
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Alabama Economic Outlook
Automotive production scaled back in 2008
From zero to three-quarters of a million in 10 years
1998: 68,724 vehicles
2007: 739,019 vehicles, a 975 percent jump
2008: 670,000 (estimated capacity 760,000)
From 1998 to 2008, about 3.6 million cars, vans, and
SUVs were produced in Alabama
In 2007 Alabama ranked 5th among auto producing
states (behind Michigan, Ohio, Kentucky, and Missouri,
in that order)
2008 production:
Honda (282,560)
Hyundai (237,042)
Mercedes (n.a.)
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Alabama Economic Outlook
Vehicle production adding to exports
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Alabama Economic Outlook
Germany, Canada major export destinations
Alabama Exports by Destination
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Alabama Economic Outlook
Exports up in 2008, but transportation
equipment down
Alabama exports for the first nine months of 2008 rose
12 percent to $12.2 billion.
Transportation equipment exports, the lead export
category, decreased by 3.0 percent to $4.4 billion
compared to the same period in 2007.
Germany remained the state’s largest trading partner,
followed by Canada, China, Mexico, the United
Kingdom, and Japan.
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Alabama Economic Outlook
Alabama still seeing strong population gains
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Alabama Economic Outlook
State continues to grow from migration
Components of Alabama Population Change
Population
Net
Natural
Estimate Migration
Change
4/1/2000
4,447,355
7/1/2000
4,451,687
-204
4,494
7/1/2001
4,462,832
-4,044
17,195
7/1/2002
4,469,906
-4,745
13,775
7/1/2003
4,486,598
6,901
12,688
7/1/2004
4,506,574
9,606
12,634
7/1/2005
4,537,299
19,806
13,527
7/1/2006
4,587,564
37,231
14,328
7/1/2007
4,626,595
21,862
16,530
7/1/2008
4,661,900
18,578
15,883
Source: U.S. Census Bureau.
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Alabama Economic Outlook
Alabama attracting residents from other states
United Van Lines reported
moving more people into the
state than out in 2008: 58.1
percent vs. 41.9 percent.
IN
OUT
Alabama ranked 4th and was
the only southern state on
the high-inbound list.
2008 is Alabama’s 6th
consecutive year with more
than 55 percent inbound
moves.
Workforce Development Regions
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Alabama Economic Outlook
State per capita income on upward trend
Alabama Per Capita Income as Percent of U.S.
Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Alabama Economic Outlook
Personal income slumped in Q3 2008
after strong gain
Alabama saw above-average gains in total personal
income over the last year.
From Q3 2007 to Q3 2008 Alabama personal income rose 4.2
percent compared to 3.7 percent for the nation.
The increase of 3.0 percent in the second quarter of 2008 was
fourth highest among the states. U.S. personal income rose
1.6 percent.
However, job losses and reductions in hours hit the state hard
in the third quarter. Personal income declined 0.9 percent for
the quarter versus a 0.05 percent U.S. increase. Alabama was
one of 23 states to post a decline in Q3 2008.
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Alabama Economic Outlook
Alabama unemployment rate below U.S.
Alabama unemployment has remained below the U.S. rate since
2002. November 2008 nonseasonally adjusted rates were:
United States
Alabama
6.5 percent
5.9 percent
The state’s labor force contracted 0.4 percent (8,200 workers) in
November. Total employment decreased by 18,100.
Unemployment in every metro area was below the U.S. average
in November 2008.
Ten counties saw unemployment above 10 percent in November.
These include five historically high-unemployment counties
(Bullock, Dallas, Lowndes, Perry, and Wilcox) and five counties
that have been impacted by plant closings in industries including
textiles and apparel, wood products, and manufactured housing
(Chambers, Marion, Randolph, Winston, and Coosa).
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Unemployment up, but below U.S. across metros
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Alabama Economic Outlook
Alabama’s metro economies fared better
than nonmetro counties in 2008
Alabama saw 10,300 new jobs created during the first 11 months
of 2008. The state’s 28 metro area counties gained 18,550 jobs;
the 39 nonmetro counties lost 8,250 during this period.
Every metro shed manufacturing jobs; only Gadsden lost jobs in
services. (Retail trade gains are due to seasonal hiring.)
Change in metro area jobs by industry:
Services
13,100
• Professional and business
• Educational and health
• Leisure and hospitality
6,000
3,600
3,500
Retail trade
Nat res/mining/construction
Manufacturing
Government
2,900
1,000
-4,300
3,100
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Most metros added jobs from January
to November 2008
November
2008
Alabama
Anniston-Oxford
Auburn-Opelika
Birmingham-Hoover
Decatur
Dothan
Florence-Muscle Shoals
Gadsden
Huntsville
Mobile
Montgomery
Tuscaloosa
2,007,800
53,700
56,600
532,700
58,500
62,300
58,200
37,300
215,700
184,500
182,100
98,500
Change from January 2008
Number
10,300
800
1,500
4,900
-500
100
1,000
-400
5,100
3,100
2,700
600
Percent
0.5
1.1
2.7
0.9
-0.9
0.2
1.7
-1.1
2.4
1.7
1.5
0.6
Source: Alabama Department of Industrial Relations.
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Alabama Economic Outlook
Huntsville, Mobile, Montgomery increased
share of Alabama GDP in 2006
GDP by Metropolitan Area
(Millions of Current Dollars)
Percent Change
2006
2001 to
2006
2005 to
2006
Percent
of State
2006
158,566
33.6
5.4
100.0
Birmingham-Hoover
51,535
28.6
4.9
32.5
Huntsville
17,115
45.5
6.8
10.8
Mobile
13,892
32.4
9.3
8.8
Montgomery
13,859
32.5
6.2
8.7
Alabama
Source: Bureau of Economic Analysis, U.S. Department of Commerce.
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Alabama Economic Outlook
Huntsville, Auburn-Opelika income above U.S.
in FY2008
Source: U.S. Department of Housing and Urban Development,
Office of Economic Affairs.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
House prices holding up better
across state than nation
OFHEO House Price Index through Q3 2008
(Percent Change)
1-quarter
United States
-2.7
Alabama
0.4
Anniston-Oxford
1.6
Auburn-Opelika
1.4
Birmingham-Hoover
-0.7
Decatur
-0.5
Dothan
2.9
Florence-Muscle Shoals
4.6
Gadsden
3.9
Huntsville
0.5
Mobile
2.5
Montgomery
-0.8
Tuscaloosa
-0.1
1-year
-4.0
2.8
2.4
2.4
2.0
4.2
3.0
8.9
3.7
4.1
5.0
-0.8
3.1
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Alabama Economic Outlook
Challenges facing the Alabama
economy in 2009
More job losses in the manufacturing sector
10,800 jobs were lost between January and November 2008
Job losses at auto manufacturers and suppliers are increasing in 2009
Slow growth or decline in consumer spending and income
Sales tax receipts were down 10.6 percent for the first quarter of
FY2009 compared to first quarter FY2008
Individual income tax collections were 2.2 percent lower for the same
period
Declining revenue to fund public education
Cutbacks in federal government spending for some programs
Continuing trouble in the state’s banking and real estate sectors
Plummeting business optimism (Q1 2009 BLCI)
Long-term workforce development
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Alabama Economic Outlook
Alabama Workforce Report III: Population Projections (Supply)
Prime working age group (20-64) will grow slower than general population.
Older worker participation will become important and necessary.
Alabama Population by Age Group, Census 2000 and Projections
Age Group
0-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65+
2000
1,256,169
306,865
301,196
301,819
340,300
345,212
315,173
285,036
225,450
190,082
579,798
2006
1,272,373
330,297
301,464
298,334
310,248
342,637
352,504
327,413
291,983
232,022
624,090
2016
1,285,464
344,663
331,350
319,074
308,313
314,626
323,752
354,425
358,609
321,697
802,709
2025
1,333,075
339,599
321,999
338,213
336,341
333,613
317,382
326,661
330,329
355,702
1,053,083
20-64 Total
2,611,133
2,786,902
2,976,509
2,999,839
Total Population
4,447,100
4,683,365
5,064,682
5,385,997
1.0
6.8
8.1
4.8
7.6
15.0
Change from 2006
0-19
20-64
Total Population
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Alabama Workforce Report III:
Implications and Recommendations
Job growth will exceed population and labor force growth through 2025.
Strategies to increase the labor force participation rate and encourage
in-migration will be needed to address potential shortfalls of about
140,000 to 170,000 workers in 2016 and nearly 406,000 in 2025.
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Alabama Economic Outlook
Alabama Workforce Report III:
Implications and Recommendations
Efforts to address the need for higher labor force participation or
faster labor force growth or both to meet workforce demand must
include:
Improving education and its funding
Focusing on hard-to-serve populations (e.g. out-of-school & at-risk
youth)
Programs to assess, retrain, and place dislocated workers—
especially those affected by outsourcing—should be continued and
enhanced because they can improve the labor force participation
rate
Recruiting: Using economic opportunities to attract new residents
Facilitating in-commuting
Encouraging older worker participation
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Alabama Economic Outlook
State’s housing market continues to slide
A total of 9,902 building permits were issued for singlefamily homes in Alabama during the first 11 months of
2008. This was down 38.5 percent from the 16,813
issued during the same period in 2007.
Multi-family units permitted through November 2008
totaled 3,605, down 25.4 percent from 2007.
Through November a total of 40,954 homes were sold,
23.3 percent below the same period in 2007.
Prices were down just 1.0 percent, although average
days on the market were up by 13.
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Alabama Economic Outlook
Q1 2009 BLCI shows steep drop in confidence
The business environment is expected
to be much worse in the first quarter.
The BLCI first dropped below 50 in
first quarter 2008, coinciding with the
first full quarter in recession. An index
below 50 indicates contraction.
The U.S. economy indicator is the
weakest; Alabama’s economy is also
in decline.
Hiring and capital spending
component indexes saw steep
declines and will be very weak this
quarter; the outlook for sales and
profits is just slightly better.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Alabama outlook above U.S., but falling
Source: BBVA Compass and Center for Business and Economic Research.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Sales and profits continue decline in Q1 2009
Source: BBVA Compass and Center for Business and Economic Research.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Job growth and capital spending drop sharply
Source: BBVA Compass and Center for Business and Economic Research.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Confidence weak across metros
Source: BBVA Compass and Center for Business and Economic Research.
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Alabama Economic Outlook
BLCI Q1 2009 Topical Questions:
Alabama Compensation Issues
The outlook for compensation increases in 2009 is much worse than
in the three previous years.
About 53 percent of panelists expect compensation to be flat or
decline in 2009; this contrasts to about 22 percent in 2008.
For employees who see an increase in non-benefit compensation,
it will generally be less than 3 percent.
Merit/performance increases will account for 42.2 percent of raises,
while cost of living adjustments should make up about 41 percent.
Year-end 2008 bonuses could contribute 10.5 percent, down from
12.9 percent a year ago. Bonuses will generally be smaller than in
prior years, with about half amounting to less than 3 percent of
employee wages. 16.4 percent of workers could receive bonuses of
9 percent or more.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Most firms spending the same or less on
compensation in 2009
Source: BBVA Compass and Center for Business and Economic Research.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Firms reducing employment and hours
Source: BBVA Compass and Center for Business and Economic Research.
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Alabama Economic Outlook
Your participation can help make the BLCI
a reliable indicator of state and local trends
The BLCI is a quarterly online survey.
Responses to the topical questions are optional.
An average of 310 panelists completed the 2008
surveys.
Surveys are open for the first two weeks of the month
preceding an upcoming quarter.
The Q2 2009 survey will be open March 1 through March
15 at www.blci.com.
Thanks for your new or continuing participation!
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Alabama Economic Outlook
The job picture is much worse in 2008
From November 2007 to November 2008, the state lost
15,400 jobs. This compares to a gain of 24,900 between
November 2006 and November 2007.
During the 12-month period ending in November 2007,
manufacturing lost 2,200 workers. From November 2007
to November 2008, the sector lost 12,300 jobs.
From November 2007 to November 2008, retailers lost
4,100 jobs, versus a gain of 3,300 jobs during the 12month period ending in November 2007.
Alabama’s unemployment rate increased from 3.7 percent
in November 2007 to 6.1 percent in November 2008.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Alabama Nonagricultural Employment
Change in Number of Jobs
Total Nonagricultural
Natural Resources and Mining
Construction
Manufacturing
Durable Goods Manufacturing
Nondurable Goods Manufacturing
Trade, Transportation and Utilities
Retail Trade
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Federal Government
State Government
Local Government
Nov. 2007-Nov. 2008
Nov. 2006-Nov. 2007
-15,400
100
-3,100
-12,300
-5,900
-6,400
-4,100
-4,100
-200
-400
1,900
-200
100
-400
3,200
300
1,300
1,600
24,900
-300
2,900
-2,200
400
-2,600
6,100
3,300
800
0
6,000
3,300
2,900
200
5,200
300
500
4,400
Source: Alabama Department of Industrial Relations.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Alabama Gross Domestic Product and
Nonagricultural Employment
Annual Percent Change
Source: U.S. Department of Commerce, Alabama Department of Industrial Relations,
and Center for Business and Economic Research, The University of Alabama.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Alabama Revenue Forecasts
Millions of Current Dollars
Forecasts
FY2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
Total Tax Revenues
Percent Change
$6,872.6
8.2
$7,621.9
10.9
$8,371.4
9.8
$8,724.90
4.2
$8,962.3
2.7
$9,060.4
1.1
$9,288.5
2.5
Sales Tax Revenues
Percent Change
$1,703.2
8.0
$1,806.8
6.1
$1,968.7
9.0
$2,017.70
2.5
$2,029.0
0.6
$1,997.5
-1.6
$2,014.5
0.9
Individual Income Tax Revenues
Percent Change
$2,652.6
8.0
$2,954.5
11.4
$3,219.5
11.3
$3,511.8
9.1
$3,608.5
2.8
$3,663.0
1.5
$3,748.5
2.3
Corporate Income Tax Revenues
Percent Change
$299.7
24.8
$427.9
42.8
$528.4
37.7
$509.9
-3.5
$554.5
8.8
$548.3
-1.1
$553.4
0.9
All Other Tax Revenues
Percent Change
$2,217.1
20.1
$2,432.7
9.7
$2,654.8
9.1
$2,685.5
1.2
$2,770.4
3.2
$2,851.6
2.9
$2,972.1
4.2
Alabama Education Trust Fund
Percent Change
$4,454.0
9.5
$4,968.2
11.5
$5495..5
10.6
$5,853.50
6,5
$5,942.3
1.5
$5,962.5
0.3
$6,078.3
1.9
Alabama General Fund
Percent Change
$1,285.1
-0.2
$1,407.3
9.5
$1,600.0
13.7
$1,603.10
0.2
$1,790.3
11.7
$1,794.0
0.2
$1,820.3
1.5
Source: Alabama Department of Revenue and Center for Business and Economic Research,
The University of Alabama, November 2008.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Total Alabama Tax Collections
Tax Collections
Annual Percent Change
Annual Percent Change
Tax Collections
Millions of Dollars
Source: Alabama Department of Revenue.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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Alabama Economic Outlook
Amount in Fund (Billions)
Alabama Education Trust Fund and General Fund
Source: Alabama State Budget Office.
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Alabama Economic Outlook
In conclusion
Many aspects of the state’s economy will be weak or
declining in 2009:
Alabama GDP
Alabama employment
Total tax collections
Forecast
0.3 percent
-0.9 percent
1.1 percent
Range
-1.5 to 0.7 percent
-1.9 to 0.3 percent
-0.7 to 1.8 percent
Education and diversification must be priorities
Workforce and economic development funding challenges remain
Focus on optimality and sustainability
Tax policy (education, infrastructure, health and safety, …)
Business and consumer behavior
CENTER FOR BUSINESS AND ECONOMIC RESEARCH, THE UNIVERSITY OF ALABAMA
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