In this week’s Economic Report, Dr. Rick Harper discusses growth in leisure and hospitality as a driving factor in Pensacola’s economic growth.
In a recently published column, Harper wrote about how job growth in the leisure and hospitality sector has been steadily improving.
Harper said that job growth started at the end of the Great Recession in 2010, but was then stalled by the 2010 Deepwater Horizon oil spill.
“The Pensacola economy was a bit weak for a while,” Harper said. “Job growth started again in earnest in January of 2012, and, since January 2012, we’ve seen job growth of just over 10,000 people in sectors other than tourism in the Pensacola economy.”
Comparatively, job growth in the tourism industry has been much stronger.
“We’ve seen job growth of just over 5,000 in tourism-related occupations in Pensacola,” Harper said. “When you look at the growth rates given the sizes of those sectors, leisure and hospitality jobs are growing currently at about four times the rate of growth of jobs in non-tourism jobs in the Pensacola economy.”
Harper took a broad view, looking back to 1990 as the starting point of his piece. There were some surprises to be found in the date, Harper said.
“We sometimes think of Pensacola as being a slower growth area, relative to Florida,” Harper said. “But actually, retail sales in Pensacola in tourism-related shops and stores have exceeded the national average growth rate in retail sales.”
On the other hand, Harper said that retail sales in non-tourism stores did lag behind.
“It’s important to take a look back in time because remember, we had hurricanes in 2004 and 2005, Ivan and Dennis, and our retail sales peaked following those hurricanes because everybody replaced everything,” Harper said. “Non-tourism retail sales rose about 30 percent in the wake of Hurricane Ivan, and then they stayed that high for the next two years really.”
By 2006, retail sales began to decline again and continued to decline until the end of the Great Recession and the end of the oil spill effect, Harper noted.
“They declined sharply for a period exceeding four years, and, in fact today, as we sit here in January 2016, taxable retail sales in areas other than tourism have not yet recovered to the levels we saw post-Ivan in 2004 and 2005,” he said.
Harper also spoke this week to a group of realtors and members of the building industry in the Okaloosa-Walton area.
“Okaloosa-Walton had big gains from the base re-alignment closing process. They got new Army Rangers and increased staffing,” Harper said. “Those things were all good for spending in the local economy. And looking at real estate specifically, what we’ve seen is that since the real estate market started to recover, retail prices have rebounded and are now running above the national averages.”
The real estate market in the area has picked up, Harper said.
“In Okaloosa, we’ve seen a big uptick in sales of affordable housing. Houses priced under $100,000 are up strongly,” he said. “But then over in Walton, the category experiencing the most growth is actually homes above $500,000. So a coastal tourism economy, interior working economy have different patterns, but it’s good news for the real estate industry.”
Low gas prices are also making an impact on tourism spending, and it’s not just the fact that filling up may cost less for tourists in the short term.
“The most important effect is that if households around the Southeast in our drive-to market drive an average amount of miles, that’s $1,000 extra in their pocket due to lower gas prices,” Harper said. “That means they can look at each other and say ‘Let’s go to Destin; let’s go to Pensacola’ for a long weekend or a week, and that’s good news.”
Dr. Rick Harper is associate vice president for research and economic opportunity at the University of West Florida and serves as director of the University’s Center for Research and Economic Opportunity. He can be reached at email@example.com. CREO staff writer Mike Ensley contributed to this report. He can be reached at firstname.lastname@example.org.