Tri-Cities Area Jobs Rebounding

In case you missed this article in the Johnson City Press, I thought I would use it as my blog entry for this month. This is good news for the Tri-Cities!

With two consecutive quarters of employment growth, the Tri-Cities is leading the national recovery from the recession, according to a report distributed by local economist Steb Hipple.

In 2010’s third quarter, Tri-Cities metro area employment expanded by more than 5,900 jobs as compared to the same period in 2009, a 2.7 percent increase. In the second quarter, the area saw a gain of more than 800 jobs in year-over-year figures, a 0.5 percent increase.

To see the Tri-Cities leading the recovery “was not the expectation, as we lagged the national economy going into the recession,” said Hipple, who authors a quarterly labor market report for the East Tennessee State University Bureau of Business and Economic Research. “When the national recession began in 2008, labor market conditions here remained pretty good. In 2009, we started to see a downturn in employment, and when it happened, we got two years of decline in one year.”

But the Tri-Cities has bounced back “dramatically,” restoring more than half of the almost 14,400 jobs lost in 2009, Hipple said. At the end of 2008, regional employment neared its highest levels at 232,851 jobs. By the first quarter of 2010, 218,531 jobs remained. The most recent third quarter numbers show a recovery to 228,407 jobs.

In 2010, more than 6,000 jobs were added in the second quarter from first quarter figures. From the second quarter to the third, there was a gain of more than 3,400 jobs. Most of the job growth occurred in the government, and education and health sectors, with smaller gains in retail trade, leisure and hospitality, and wholesale trade. The manufacturing, transport and utilities, finance and construction industries continued to cut jobs, according to the report.

Almost 2,400 fewer people in the region are out of work than at the same time last year. Over the July to September period, the unemployment rate for the Tri-Cities area was 8.6 percent, compared to 9.7 percent a year ago, and all three cities saw employment gains in line with regional trends. On a year-to-year basis, employment gains were 3.4 percent in Johnson City, 3.3 percent in Kingsport, and 2.1 percent in Bristol. The rate of unemployment was 8.8 percent in Bristol, 8.6 percent in Johnson City, and 8.1 percent in Kingsport (compared to 9.6 percent in all three cities in the same period in 2009).

“We’re one of the parts of the U.S. leading the economy, and that’s good,” Hipple said.

But according to the report, “the problem is that ultimately the slow recovery in the nation could have a negative impact on business conditions in the Tri-Cities area.”

Though the national labor market finally began to show signs of recovery in the third quarter with lower unemployment and a smaller rate of job loss, it lacks one key element to recovery.

“Most national economic indicators are pointing in the right direction: production is increasing, consumer spending is higher, retail activity is reviving, the stock market is higher, and unemployment is falling. The missing element is job creation – strong job creation. And significant job growth is not in the short-run economic outlook,” the report said. “So the business outlook is for continued low growth in output, minimum job creation, and lingering high unemployment.”

For jobs, the “critical number” to watch will be the real gross domestic product growth rate, Hipple said, which needs to increase at an annual rate of more than 3 percent to create enough new jobs to account for both new workers and for the out-of-work existing labor force. The most recent data shows real GDP increasing at only a 2 percent rate, and the problem is getting the figure to grow faster, he said.

While the fiscal policy stimulus of $800 billion seems to have helped, Hipple said, the current political climate makes a second stimulus unlikely. Instead, the Federal Reserve has enacted a second round of monetary policy changes. Previously, the Fed dropped short term interest rates to almost zero, and simultaneously expanded the liquidity of the banking system by over $1,200 billion, which was called quantitative easing, the report said. Between now and next summer the Fed plans to expand liquidity in the banking system by another $600 billion (quantitative easing round two, or QE2).

“Changes in monetary policy, whether it’s tight money or easy money, have a delay before they work their way into the economy,” said Hipple, who estimates it will be 12-18 months before QE2 has an effect. “It will help, but it won’t kick in short term. For short term, you need a fiscal stimulus. Because of the political climate, the only part of the government now in a position to provide a stimulus is banking. It’s the weakest way and it will take longer.”

By: Kate Prahlad
Johnson City Press Business Writer

In light of all the winter weather that we've been having lately, I think the Caribbean may be looking more and more appealing. So, I thought I would briefly mention investing in Caribbean (and Central American) real estate with T. C. Lewis & Co this month.

When many people think about Caribbean property, images of sandy white beaches and lush tropical greenery may spring to mind. However, it is not just these pleasant images which make Caribbean property so appealing. There are many Caribbean property opportunities available which are tailored for investment and anticipated to generate substantial profits for astute investors.

For a Caribbean property to be tailored for investment, there are two important principles which must be followed.

Firstly, setup costs must be minimized to allow investment opportunities to be a viable option to most investors. Also, the less your setup costs are in comparison to profit, the higher your return on investment will be.

Secondly, profit must be maximized. To maximize profit on your Caribbean property, there are several factors which must be given due care and consideration.For example, many investors would require that their Caribbean property be fully managed to provide a healthy rental income. Therefore a management agency or company would ideally be setup to maximize rental occupancy, room rate charged and to fully manage the day-to-day running of the Caribbean property and surrounding land/site.

A favorable way for this to be setup is to buy a Caribbean property within a hotel or resort which is run by a well known and respected operator. This added brand name can greatly benefit the rental potential of your Caribbean property from day one.

Capital growth is also an important aspect to consider. Investors ideally need to conduct research to ensure that they are buying a Caribbean property which will experience sufficient demand for rental and for re-sale. This ongoing demand will ensure that property values will continue to increase and generate a substantial capital profit if and when the investor wishes to sell their Caribbean property.

There are many tax breaks to benefit from on your chosen Caribbean property. On some islands, there are no capital gains or inheritance tax to pay, making buying a Caribbean property a very attractive proposition compared to buying in other countries.

With due care and consideration, investors will be able to buy a Caribbean property which should adhere to all the above aspects and prove to be a profitable long term investment.

Visit TCLewisProperties.com/Projects for more information about current projects ripe for investment in the Caribbean right now.

*Dan Chamberlin contributed to this post.