In this week’s Economic Report, Dr. Rick Harper discusses a report that shows the nation’s economy shrank in the first quarter of 2014, the first downturn since early 2011.
The government initially said first quarter GDP grew at a 0.1% annual rate. That figure was revised downward to -0.1%.
The decline, says Harper, “Is actually because businesses didn’t accumulate as many inventories. And, so that’s actually a good sign, a healthy sign, going forward.” Harper says as inventories are being depleted, it’s positive moving forward because businesses have to ‘up’ production next quarter. “If you have to have a slightly negative GDP growth rate, then this is the best reason to have it. So, yes it was down, but no, it’s not serious.”
There’s been a lot of discussion recently about the minimum wage, and Harper was part of a panel discussion at a public forum titled “A Living Minimum Wage” held Wednesday, May 28 at the West Florida Public Library in downtown Pensacola. The forum was co-sponsored by the Pensacola Coffee Party and the League of Women Voters Pensacola Bay Area.
Rich Templin, Legislative Director of the Florida AFL-CIO was one of the speakers on the panel, which reflected a variety of opinions. Harper spoke against raising the minimum wage and in favor of an alternative to the minimum wage. He believes that as the minimum wage increases, the cost of hiring and the cost of a business’ goods and services go up as well.
Harper says if the objective is to alleviate poverty, he suggests a system that would lower the minimum wage and provide an earned income tax credit for lower wage workers.
“Why not put the burden onto the federal income tax because most of that will be borne by upper income people who pay more income tax,” says Harper, adding that the tax code would need to be cleaned up a bit first. He says what could happen instead is that businesses will likely look more to technology to reduce the need and cost of hiring people.
Looking at the Memorial Day Holiday weekend, one snapshot of the economic success was in the number of cars that went through the toll-booth at the Bob Sykes Bridge leading to Pensacola Beach. The four-day total for 2014 was 66,961. That’s about 4,000 fewer than recorded over the holiday period last year.
Harper calls the start to the summer tourism season a mixed bag. “So, traffic was down, not a trivial amount, at just over 5% down from last year. But, there could be any number of reasons for that. So, while I wouldn’t say it was a weak weekend, it doesn’t seem it’s going to be one of our stronger Memorial Days on record.”
Dr. Rick Harper is director of the University of West Florida Office of Economic Development and Engagement. For more information visit www.oede.uwf.edu.