By almost every measure, tourism trade in Florida’s Manatee County is showing small signs of lasting recovery from the recession, Manatee County’s tourism researcher said Monday (April 18).
Lodging occupancy rates for the county of 275,000 on the state’s Gulf Coast are up from a year ago. Hotels, condos and RV parks are able to charge more per day than a year ago. More visitors came through the area in February 2011 than 2010. More tourists are using Sarasota-Bradenton International Airport than a year ago. Even the percentage of satisfied visitors has increased, the Bradenton Herald reported.
“The recessionary contractions that we had experienced are a thing of the past,” said Walter Klages, president of Research Data Services. “From every perspective, we’ve weathered the storm, and we’ve come out of it well.”
Those positive trends indicate that Manatee County is on its way to a 2011 increase in tourism of up to 3.5%, Klages said. That’s almost a full percentage point higher than 2010’s increase of 2.6%
Businesses reduced inventories at the wholesale level for a record 11th consecutive month in July, although sales rose by the largest amount in more than a year, sparking hope for better days ahead, the Associated Press reported today (Sept. 11).
The report mirrors recent developments in the RV industry, whose forecaster Richard Curtin also is reporting a gradual upturn following a two-year decline.
Economists expect that some modest restocking triggered by the higher sales helped boost the economy out of recession in the current quarter. Some analysts said the economy could rebound to growth approaching 4%, after it fell at a 1% rate in the April-June period.
The Commerce Department reported today that wholesale inventories declined 1.4% in July, more than the 1% drop economists expected. That decline followed a 2.1% fall in June, worse than the 1.7% drop originally reported.
Sales at the wholesale level rose 0.5% in July, the fourth consecutive increase and the biggest gain since a 2% jump in June 2008.
Jennifer Lee, an economist at BMO Capital Markets, said the rebound in sales was encouraging and should help convince businesses to restock their shelves and back lots. That swing in inventories should play a major factor in boosting the economy out of a recession in the current quarter.
The overall economy, as measured by the gross domestic product, will grow at a 3.8% annual rate in the current July-September period, Lee forecast. The economy posted declines of 5.4% and 6.4% in the fourth and first quarters respectively, the worst performance in a half-century.
“For the second half of this year, things are looking better than they were a few months ago with activity being helped by stimulus efforts such as the Cash for Clunkers program,” Lee said.
Economists are worried, however, that the economy will slip back to weaker growth beginning next year as the impact of various stimulus programs dims and the unemployment rate keeps rising, depressing consumer incomes and their willingness to spend.
Still, more positive news came Friday when consumer confidence, as measured by the University of Michigan-Reuters survey, rose more than expected to a reading of 70.2 in early September, compared with 65.7 in August.
“With hope comes more spending and with more spending comes more production,” Lee said.
Wholesale inventories are goods held by distributors who generally buy from manufacturers and sell to retailers. They make up about 25 percent of all business stockpiles. Factories hold another third of inventories and retailers hold the rest.
The July inventory drop left the inventory to sales ratio at 1.23, meaning it would take 1.23 months to exhaust stockpiles. That was slightly lower than the 1.25 ratio in June, but still above the 1.13 inventory to sales ratio of a year ago.
The rise in sales at the wholesale level come amid continued weakness at many retail establishments, which reported lackluster back-to-school sales in August. However, automakers saw a spurt in activity from the government’s clunkers program.
Ford Motor Co., Toyota Motor Corp. and Honda Motor Co. all reported increased sales in August as consumer snapped up their fuel-efficient models. But rivals Chrysler Group LLC and General Motors Co., which have just emerged from bankruptcy protection, saw their sales fall for the month.
The 11th straight drop in wholesale inventories is the longest stretch on records that date to 1992, surpassing the old mark of nine straight decreases from June 2001 to February 2002, a period that covered the last recession.
Elkhart County’s unemployment rate fell in June, according to figures released Friday (July 17) from the Indiana Department of Workforce Development.
Elkhart County’s rate dropped from 17.5% in May to 16.8% in June.
The city of Elkhart’s unemployment rate also dropped, from 19.2% in May to 18.7% in June.
The drop in Elkhart’s unemployment rate could mean a couple of things. One possibility is that the labor force is shrinking. Some people have found work in areas such as farming or simply retired, said Michael Hicks, director of the center for business and economic research at Ball State University.
Another possibility is that workers are finding work with smaller businesses. Hicks said small firms — those with maybe 30 to 50 workers — are playing a larger role in manufacturing. Elkhart has gotten a lot of national attention lately, Hicks said, and its manufacturing history holds a lot of appeal to companies looking to set up shop in the Midwest.
Scott Tapley, vice president/portfolio manager with 1st Source Bank, said he couldn’t comment about new, smaller businesses coming to town. But he wouldn’t be surprised if they started to spring up.
Tapley said Elkhart is an entrepreneurial area full of creative thinkers. And the creation of small businesses helps end recessions, he said.
Elkhart County has posted unemployment figures in the double digits for 10 months. Hicks said the fallout from such figures can be hard on a community. Social service agencies see a lot of stress as contributions are down and needs rise, he said.
Hicks also said there’s a risk of “brain drain” with a prolonged recession. As young people graduate college they may be less apt to want to return to a community with a high unemployment rate.
But he said it’s doubtful Elkhart will push too many people away. Elkhart may have been one of the first areas to head into the recession, he said, but only by a few months.
He said it’s also too soon to tell whether the stimulus package is doing anything to boost the economy. He said it would take at least six months from when the package was passed at the end of February to see any impact.
“Anybody that thought that this was going to have an effect in less than six months other than on the confidence that the economy would eventually recover was living in Neverland,” Hicks said.
More than 90% of economists predict the recession will end this year, although the recovery is likely to be bumpy, according to the Associated Press.
That assessment came from leading forecasters in a survey by the National Association for Business Economics (NABE) to be released today (May 27). It is generally in line with the outlook from Federal Reserve Chairman Ben Bernanke and his colleagues.
About 74% of the forecasters expect the recession — which started in December 2007 and is the longest since World War II — to end in the third quarter. Another 19% predict the turning point will come in the final three months of this year, and the remaining 7% believe the recession will end in the first quarter of 2010.
“While the overall tone remains soft, there are emerging signs that the economy is stabilizing,” said NABE President Chris Varvares, head of Macroeconomic Advisers. “The economic recovery is likely to be considerably more moderate than those typically experienced following steep declines.”
One of the major forces that plunged the economy into a recession was the financial crisis that struck with force last fall and was the worst since the 1930s. Economists say recoveries after financial crises tend to be slower.
Against that backdrop, unemployment will climb this year even if the economy is rebounding, the NABE forecasters predict. Companies won’t be in a rush to hire until they feel certain any recovery is firmly rooted.
For all of this year, the forecasters said the unemployment rate should average 9.1%, a big jump from 5.8% last year and up from its current quarter-century peak of 8.9%. If NABE forecasters are right, it would be the highest since a 9.6%t rate in 1983, when the country was struggling to recover from a severe recession.
Some forecasters thought the unemployment rate could rise as high as 10.7% in the second quarter of next year. The NABE outlook from 45 economists was conducted April 27 through May 11.
General Motors Corp., chemical company DuPont and Clear Channel Communications Inc. were among the companies announcing mass layoffs during the survey period.
With joblessness rising, consumers — major shapers of overall economic activity — likely will stay cautious, making for a tepid turnaround. And given the big bite the recession has taken out of household wealth, notably the values of homes and investment portfolios, consumers probably will stay subdued for some time.
Seventy-one percent of the forecasters believe a more-thrifty consumer will be around for at least the next five years.
Americans’ personal savings rate edged up to 4.2% in March, marking the first time in a decade that the savings rate has been above 4% for three straight months.
Even as the NABE forecasters believe the country will emerge from recession later this year, they also predict the economy’s overall performance in 2009 will be rotten.
The economy should contract by 2.8% this year, the forecasters said in updated projections. That’s worse than the 1.9% drop they forecast in late February. If they are right, it would mark the worst annual contraction since 1946, when economic activity fell by 11%.
Still, the forecasters believe the worst is already behind the country in terms of lost economic activity.
The economy shrank at a 6.1% annualized pace in the first three months of this year, on top of a 6.3% decline in the final three months of last year, the worst six-month performance in 50 years.
For the current April-June quarter, the NABE forecasters believe the economy will shrink at a pace of 1.8%. After that, the economy should start growing again — at a 0.7% pace in the third quarter and a 1.8% pace in the fourth quarter.
NABE’s growth projections for the third and fourth quarters are lower than those made in late February. The downgrade was based on the expectation that businesses, whose profits and sales were hit hard by the recession, will remain wary of ramping up investment.
President Barack Obama’s $787 billion stimulus package of increased government spending and tax cuts, near-zero interest rates ordered by the Fed and government programs to get banks to lend more freely again all factor into the expected economic revival.
Many forecasters also predict that home sales will hit bottom by the middle of this year, another stabilizing factor for the economy. A report on sales of previously owned homes will be released today, and data on new-home sales is due Thursday.
Next year, the economy should grow by 2%, the forecasters said. That was lower than the 2.4% growth projected in February.
With a lethargic recovery expected, forecasters predict the Fed won’t start boosting interest rates until the second quarter of next year.
Because Fed policymakers expect credit and financial problems to ebb slowly, “the pace of the recovery would continue to be damped in 2010,” they said last week.