Magazine article Real Estate Issues

The (Other) Coastal Economy: Mobile Is the Economic Engine for Coastal Alabama

Magazine article Real Estate Issues

The (Other) Coastal Economy: Mobile Is the Economic Engine for Coastal Alabama

Article excerpt

Editor's Note: Recession and recovery are rarely uniform events geographically. Ever vigilant, and keeping a keen eye out for signs of economic recovery, the editors of Real Estate Issues intend to invite, on a regular basis, local and regional viewpoints on the business and economic environment from researchers and analysts at academic institutions around the country. Most states, and many, many institutions of higher learning hold within their walls real estate schools, business schools and economics departments that keep a close watch on conditions, developments and trends in the local and regional economies that affect them most directly. We begin in this issue with an analysis and commentary on the Coastal Alabama economy from Donald R. Epley, director of the Center for Real Estate Studies in the Mitchell College of Business at the University of South Alabama.

THREE VIEWS OF THE COASTAL ALABAMA ECONOMY provide a good cross-sectional analysis of the direction and strength of future activity. The Mobile Business Activity Index is an approximation of economic growth. It tracks employment for 10 NAICS industrial classifications weighted by each industry's personal income-per-worker. It shows the level of workforce spending power in the economy. Business activity declined 0.11 percent from the previous quarter, and 1.57 percent from the same quarter in 2008. The index increased 3.58 percent from the same quarter four years earlier. Although the current index declined slightly, the overall three-year trend is upward with a modest growth.

[FIGURE 1 OMITTED]

The Mobile Leading Business Activity Index includes 14 time series selected as good indicators of future business activity. All series are assembled for the most recent month or quarter, three statistical tests are applied, and the results are weighted into an index number that provides a good indication of business activity in the next six months. An index above .50 is considered to the positive with moderate strength.

The most recent Leading Index was +.43 which is a below average performance. When the four time series representing the U.S. economy and the state of Alabama are removed, the Index increases to .60, representing an above-average performance. This means that the 10 remaining Mobile indicators point to a stronger performance in the next three months.

[FIGURE 2 OMITTED]

In the period following 2003, the rate of increase in local employment was higher than the rate of increase in the local civilian workforce, which is a good indicator of the future. This relationship caused the unemployment rate to drop to 3.2 percent. In recent periods, the reverse is true, causing the unemployment rate to increase to 9.5 percent in May.

All four of the national and Alabama indicators were judged to be negative. The U.S. Conference Board Leading Index showed a recent increase, but has not yet indicated a definite positive influence on the local metro area. The Alabama Business Index reached its lowest level ever with a very slight recent increase. In sum, the national and state indicators do not indicate an improving business environment.

The USA Activity Index projection, new residential 1 -unit building permits, city sales tax collections, county sales tax collections, and total attraction visitors were all viewed as heading in the right direction.

Figure 3

2009 Critical Mobile Economic Indicators Time Series in the Leading
Business Index

Fourteen time series have been selected to represent the indicators of
future business activity growth

                                       COVERAGE  DIRECTION

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