Economic Snapshot Overview by Dr. Reid Cummings - August 2019

Posted on August 29, 2019 by Dr. Reid Cummings
Dr. Reid Cummings

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Greetings, and welcome to the August 2019 Mobile Bay Economic Snapshot.

The 2019 Gulf Coast Real Estate and Economic Education Conference drew nearly 250 people. Held for the second year on our beautiful campus, conference attendees came from throughout the region and some even came from as far away as New York, Los Angeles, Chicago, and Miami. It tends to make one wonder: did they come this far for vacation, and decide to attend our Conference while here, or are folks in other parts of the country paying more attention to all the good things going on in Lower Alabama?

Featured speakers included Dr. Chris Lee, Dr. Elliot Eisenberg, and Alabama Secretary of Commerce Greg Canfield. Dr. Lee pointed out multiple ways in which the real estate business and those industries supporting it are changing and offered glimpses of more changes to come. For example, he suggested that office buildings now operating traditional daily office hours will soon be operated 24/7. He explained there are multiple reasons for the shift, ranging from economies of scale to issues of sustainability. Another example imagined what happens when a giant technology company acquires a giant real estate firm—Google acquiring CBRE for example. Consider the enormity of data CBRE has about its clients, properties, owners, lenders, and occupants. Pondering how a company such as Google might potentially use that information tends to boggle the mind. More perplexing, and perhaps troubling is the possibility of Congress passing a national building code that would make selling a non-compliant building illegal. Take just a moment to imagine the ramifications of that! Dr. Lee loves our region and its prospects, highlighting Alabama’s third place national ranking as the best climate for business, second place for workforce training, and fifth place for economic growth potential.

Dr. Eisenberg pointed to several key economic indicators underscoring the strength of our economy. Although mortgage debt is less than before the financial crisis, total debt is higher. Even so, households have the lowest high interest revolving debt in over 20 years. Consumer confidence remains high despite looming uncertainty over China and Brexit. Small business confidence and optimism are the same as in 2004-05. Personal consumption continues to drive the national economy, accounting for two-thirds of GDP. Congress’ recent budget deal will boost spending, bumping GDP by as much as 0.25%, while the economic impact from the 2017 tax cuts will approach zero by 2020. A demographic reality since the financial crisis is that U.S. birth rates have declined over the past 10 years, translating into lower labor force and productivity growth. This is a critically important point. Why? Consider that since our economy is largely dependent on consumption, over time, slower birth rates will likely lead to slower national economic growth.

Secretary Canfield highlighted recent Alabama successes, including $8.7 billion dollars in new investment and the creation of more than 17,000 new jobs in 2018. He mentioned the successes of many national companies doing business here. Recent newcomers to Alabama include Facebook, Amazon, Shipt, ULA, and Toyota-Mazda, joining others who have been operating here for many years, including, among others, Airbus, Austal, Mercedes, Honda, Hyundai, GE Aviation, and Georgia Pacific. So many of our industries continue to do well. For example, auto manufacturing investment attracted $3.3 billion dollars in 2018 with expectations of creating nearly 5,500 new jobs and the forest industry saw $1.3 billion in new capital with an eye toward creating 2,000 new jobs. Development in rural areas saw gains as well, with $1.1 billion in new investment and creation of more than 1,100 new jobs. The Secretary recognizes that technological innovation and change will create a much different future. To prepare, his office is launching Accelerate Alabama 3.0, starting with the Alabama Incentives Modernization Act. It is designed to increase Alabama’s abilities to attract new tech jobs and to make our rural economies more vibrant; the latter will be boosted by the Commerce Department’s recent move to add a Rural Development Manager.

Our afternoon session featured two panels. The first panel focused on regional economic development and was moderated by Mobile attorney Michael Berson of Adams & Reese. The four panelists all hold top economic development positions in their communities and included David Rodgers from the Mobile Area Chamber of Commerce, Lee Lawson from the Baldwin County Economic Development Alliance, George Freeland form the Jackson County Economic Development Foundation, and Scott Luth from the FloridaWest Economic Development Alliance. The discussion centered on how economic development works at the community level and how it often melds multiple communities together in pursuit of regional projects. It was a unique opportunity for Conference attendees to understand that although economic developers face many hurdles and stiff competition, they all recognize that circumstances do sometimes necessitate a joint effort. We should be proud to have industry officials who all realize that one community’s gains accrue to the benefit of everyone in the region, and who work hard every day to make it so.  

The second panel focused on cyber-security and was moderated by Glenda Snodgrass, President of The Net Effect. Speakers included FBI Supervisory Special Agent Dennis Reed and Kevin Levy, Commander of the Mobile Police Department’s Technology and Cyber-Intelligence Unit. The conversation focused on the growing number of ways that cyber criminals invade our daily lives and in so many ways threaten our livelihoods. In particular, the increasing persistence of cyber-crime in the real estate industry startled many in the audience. Real estate cyber-crime has increased exponentially in recent years costing victims millions of dollars. The huge takeaways from the panel seem so simple yet are easily forgotten. One is to never trust an email request asking for money, even if it appears the email came from someone who is known. Instead, call the sender to verify the funding request. Another is that when you believe your computer has been invaded, to prevent further damage to data or networks, never hesitate to literally unplug it from the web. Again, quite simple, but in practice often overlooked.

By all accounts, this year’s conference was a hit. Our Advisory Board’s Programming Committee will soon begin planning for next year’s event. Please be on the lookout for information and we certainly hope to see you on campus next year!

Until next time, from everyone at the Center, we wish you and yours all the best.

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