Escambia County Leading MANY other Large Counties in Wage Growth! Leading Mobile in Job Growth!

Dr. Rick Harper addresses the NAIOP luncheon at the Pensacola Yacht Club 5-24-2023 and provided some significant, positive data on our economic development achievements locally.

At a NAIOP Luncheon I had the opportunity to attend yesterday afternoon at the Pensacola Yacht Club, two speakers gave presentations on the state of the economy and the banking system locally and nationally with an emphasis on where we are now and where we are headed in this uncertain economy.

The first speaker was Heath Jordan, the Chief Investment Officer with Trustmark Bank.  His presentation was on the state of the banking system nationwide and in our region post the Covid pandemic.  He went into great detail about how the Federal Reserve handled the Covid shutdown, and he related that he feels the actions taken prevented a depression.  The actions taken led to "lots of cash sloshing around in the nations's economy" he stated.  This led to large individual (uninsured) deposits at some banks that combined with those same banks' investments in long horizon financial instruments  led to a perfect storm of rapid withdrawals that outpaced the investment returns thus necessitating action be taken by federal regulators in order to prop up these banks.  In particular he was speaking of the recent collapses of Silicone Valley Bank, Signature Bank, and First Republic Bank.  While he feels there may be more banks going under in the 6-9 months ahead, he doesn't believe it will be a widespread phenomenon. "When it happens it will be quick, and it will be quiet" he stated.  According to Jordan-SVB and Signature both were heavily invested in Mortgage Backed Securites--insturments that pay higher dividents but take longer to mature.  With the inflation pressures building and interest rates rising--large deposit holders (uninsured) taking out all of their money outpaced the banks' ability to recapitalize quickly enough to remain solvent. How does that happen?  Jordan held up his phone as he stated, dryly, "This is the reason why....customer ability to withdraw money outpaces the Fed's ability to respond/act." Jordan concluded his remarks stating that he feels a credit slump is coming as the interest rates rise-- but overall he seemed optimistic on our area long term.

Next up was Dr. Rick Harper, Economic advisor with Triumph Gulf Coast.  His presentation had the room listening intently as he started the talk with a bit of humor "The economic situation continues to be ...... interesting" as he threw up a graph on the screen.  But then he continued with some very, very good news.  According to Harper (quoting directly from a news release from the Bureau of Labor Statistics) "Of the 356 largest counties in the United States--Escambia County ranked #22 among all of them for wage growth year over year."  (I subsequently emailed Dr. Harper for the source document and his power point--because that information as well as the balance of his presentation-- was amazingly profound---and a huge justification for the work we do in economic development locally).  

Some other Key Takeaways from Dr. Harper's presentation:

--Escambia County and Pensacola are outpacing Mobile Alabama in terms of job growth--with our area adding 44,200 non-farm jobs to Mobile's 10,500 from January of 1990 to April of 2023 (29.2% growth here, 5.8% in Mobile)

--Construction costs and other factors are damaging to home affordability (costs up 50% compared to  7-8 years ago) 

--Property Insurance prices (state specific to Florida) showing no sign of a "let up."

--Florida leads the nation in year over year population growth (1.9% 2021 to 2022)

--Homeowner equity is very high and debt service is historically low--a good thing

--The Pensacola area ranks #15 out of ALL metropolitan areas in the country in rental price increases from 2020 to 2022 at a 23% increase (affecting housing affordability) 

--Housing prices have grown 6.9% from 2022-2023--exacerbating affordability.

--We have a housing shortage and need to build more.  Absent that, governments should consider allowing greater density, accessory dwelling units, and looking at easing parking regulations/requirements to ease the supply issues.

Dr. Harper also suggested he sees signs of a recession coming--however he was quick to also say he feels confident Florida will weather it far better than other parts of the country because of our low unemployment, tax structure, and growth.

During the Q&A toward the end of the session I had the opportunity to ask Dr. Harper what would happen to the economy and the banking system locally in Pensacola if the Federal Government defaults due to a failure by congress and the white house to come to an agreement on the debt ceiling?  

"They have to solve it, otherwise it will be rising interest rates and chaos" he stated.

Check out Dr. Harper's Power Point here.