Economic News of the Wiregrass

A Quick Summary
10 June 2010

The National Scene:

 Most economists agree that unemployment statistics are the most important ingredient in
determining the future course of the U.S. economy – the pace and magnitude of the
recovery.
o A Friday 4 June report showed an increase of 431,000 in non-farm payrolls in
May.
o However, 411,000 were temporary workers to help with the 2010 U.S. Census.
o Private sector employment increased by just 41,000 in May following a 218,000
increase the month before.
o Many analysts consider that an increase of 125,000 per month is necessary just to
hire the new entrants coming into the job force.
o The forecast of new jobless claims for the week of 29 May is 448k from a
previous report of 463k.
o The unemployment rate dropped from 9.9% to 9.7% due to a statistical
adjustment that eliminated 332,000 individuals from the workforce who had given
up seeking work.
o Some believe that if those taking part-time jobs and those giving up entirely were
included in the unemployment statistics, the rate would be near 17%.
o While recent trends show some job growth, the recovery will be slow with an
economic recovery that is very fragile.
 An 8 June National Federation of Independent Businesses (NFIB) survey shows:
o Large businesses are cruising ahead.
o Small businesses are standing still.
o Poor sales and high taxes are pointed out as the chief culprits.
o Bank lending to small business is falling sharply.
 On a positive note, both ICSC-Goldman and Redbook report increases in retail store
sales.
 Both the 3-month and 6-month US Treasury Bill Auctions came in at very high demand
levels (bid/cover over 4.0) with consequent lower interest rates.
o The demand was fueled by the turmoil in Europe and the flight to safety by
investors.
o China and Japan showed evidence of a shift in their portfolios from the declining
Euro toward the strengthening dollar.
o It is unclear how much longer the unusually high demand will continue for short
term (less than 1 year) Fed paper.
o 3-month London Interbank Offering Rate (LIBOR) is now over 0.530 from a a
rate of 0.253 a week ago indicating a perception of some weakness in European
banks.

1
Alabama Economic News:

 Alabama’s unemployment rate remained unchanged in April at 11.0%.

o Coffee County had the lowest rate in the state with a 7.7% rate.
o Houston County’s rate dropped from 9.2% to 9.1%.
 Retail sales are up with prices remaining stable.
o The major driver is the unemployment picture – more jobs – more spending.

Wiregrass Statistics:

 Thanks to the data from Steve Turkoski, Dothan Area Chamber of Commerce; it appears
that unemployment in the Dothan Metropolitan Statistical Area (MSA) has bottomed out
and may show a slight increase.

Wiregrass Housing Stats:

HOUSING STATS / COMPARISONS -MAY 2010

ENTERPRISE DOTHAN

#
DATE Sales Average Price Inv/Sales # Sales Average Price Inv/Sales
Ratio Ratio
May-
10 110 $ 132,219.00 9.2 N/A N/A N/A
Apr-10 93 $ 144,174.00 10.3 113 $ 150,713.00 105
Mar-
10 82 $ 149,280.00 11.7 104 $ 153,718.00 11.1
Feb-
10 57 $ 139,679.00 16.9 73 $ 168,676.00 15.8
Jan-10 46 $ 146,988.00 21.4 52 $ 143,304.00 21.3
Dec-
09 69 $ 140,590.00 13.8 84 $ 138,845.00 12.7
Nov-
09 80 $ 138,489.00 12.5 83 $ 146,438.00 13

2
What Does It Mean For the Wiregrass?

 Recovery will be slow with little evidence of inflation.

 The unemployment rate will continue to improve albeit at a slow rate.
o Enterprise is likely to improve faster than Dothan as a consequence of Ft Rucker
growth.
 Interest rates will likely remain low into 2011.
o Mortgage rates should remain at very low levels for the remainder of 2010.
 Retail sales will increase at a measured pace.
 Lending to small business will continue to be tight.
 Enterprise real estate appears to be moving forward faster than Dothan.
 Commercial Real Estate (CRE) statistics (cap rates, rental rates, occupancy rates) may
not yet have reached bottom despite the new construction of a pharmacy, two grocery
stores and a hotel that are underway.

The Economic News of the Wiregrass is offered as a public service to the community and does not represent the views of SunSouth
Bank or its employees. It is produced by its author using a wide variety of media sources including: The Wall Street Journal, The
Financial Times, Bloomberg.com, Econoday, Capital Economics, U.S. Bureau of Labor Statistics, Federal Deposit Insurance
Corporation, U. S. Federal Reserve Insurance Corporation, Market Watch, CNBC News, The Dothan Eagle among others without
attribution. The views and comments expressed are solely those of the author. There is no intention to offer investment or tax advice
and readers should consult a professional advisor of their choice. There is no claim for the complete accuracy of the information and
any errors or omissions are unintended. Questions or comments are welcome and should be addressed to the author Roger Peterson at
334-836-4201 or rpeterson@sunsouthbank.com.

V 2.0 – 10 Jun 10 – R Peterson

3
4