In this week’s Economic Report, Dr. Rick Harper discusses the projection for growth for local economies over the next few months and the rise in Pensacola airfares.
The University of West Florida Haas Center is out with a report, projecting that Northwest Florida economies are expected to experience uneven growth through May.
“I think uneven is a good way to put it,” said Harper, noting the Haas Center’s new quarterly Indexes of Coincident and Leading Economic Indicators.
“It’s an interesting new set of tools, and it’s a good forward-looking measure of where our local economies are going to be over the next half year.”
The new indexes use monthly unemployment rates, nonfarm payroll data and retail sales figures to track economic activity in the Pensacola, Fort Walton Beach and Panama City areas through November 2014, the most recent month for which there is reliable information. Additionally, the indexes project how the areas’ economies will perform through May.
Some key findings:
The Pensacola-area economy grew between November 2013 and November 2014, and growth is expected to accelerate through at least the end of May.
Though the Fort Walton Beach area saw increased economic activity from November 2013 and November 2014, its level of growth is expected to slow through the end of May.
The Panama City-area economy saw little movement during the 12-month period that ended Nov. 30, 2014. Economic activity in the area is projected to decrease from March through at least May.
The published article with its findings can be found on the Haas Center website.
“The findings of the report are that growth is actually good in Pensacola. We’re up about 3.3 percent in terms of the Leading Index,” Harper said. “That means we can expect to see continued expansion in the two-county Pensacola Metro Area.”
The Leading Index shows growth up over 2.5 percent for Fort Walton Beach. The slightly higher growth rate in Pensacola represents a “somewhat unusual” break in the recent trend where the Fort Walton Beach area has grown faster than other areas since BRAC 2005.
The surprise is Panama City, which is showing a slight projected shrinkage at a rate of about 1.3 percent. “I think some of that’s due to the ongoing conversion of hotels into condos, which requires less labor. There’s somewhat of a slowdown in the federal employment associated with Panama City,” said Harper.
Also this week, Harper is weighing in on a new column he wrote on Pensacola Airfare, in which he shows that the "cost of flying out of Pensacola is increasing faster than the national average."
The report references the federal Bureau of Transportation Statistics, which provides quarterly data that allow analysis of air travel patterns and prices through time. The BTS data show that air travel is increasing over time.
From the second quarter of 2004 to the second quarter of 2014, enplanements at U.S. commercial airports increased by about 18 percent. Over that same 10-year period, Pensacola enplanements grew by just over 14 percent. This is large relative to the size of the traveling public, as U.S. population grew by about 10 percent and Pensacola population grew 7.5 percent over those same years. Air travel has increased relative to population, both locally and nationally.
If we look at the cost to the passenger, prices per mile flown have risen both nationally and locally over time, but the increase has been greater in our local market.
Nationally, the average airfare paid per mile traveled rose over those 10 years from 20.5 cents per mile to 26 cents per mile, or by 27 percent. Locally, airfares went from just under 21 cents per mile in 2004 to just over 30 cents per mile in 2014. This is an increase in price per mile of 47 percent for travel out of Pensacola. During the same period the overall consumer price index rose by 26 percent.
“You know, we worked for years to bring Southwest Airlines to town. It’s been a decade long quest to get them here,” said Harper. Ironically, after Southwest arrived they determined that the most profitable strategy was to focus on markets to the west, leaving Delta Airlines’ service to eastern markets without competition.
“And, so what we’ve seen is that the cost per mile of travel through Atlanta, which means on Delta, has risen for Pensacola,” Harper said. “And given that they are far and away the largest air carrier operating out of Pensacola that means that average fares have risen more rapidly over the past number of years in the Pensacola market than they have statewide or for the nation.”
Harper's entire report on airfares is also available on the Haas Center website.
Harper suggests that competitively priced airfares are important to efforts to attract more tourists and businesses.
Finally, while full details on the economic impact of Pensacon 2015 are not available yet, Harper says the overall effect is positive. The February report confirms what Pensacola hoteliers have indicated in that occupancy was good over Pensacon weekend.
Dr. Rick Harper is director of the University of West Florida Office of Economic Development and Engagement and also serves as director of the Studer Community Institute, a Pensacola-based organization that seeks citizen-powered solutions to challenges the community faces. firstname.lastname@example.org.