1. Dr. J. Antonio Villamil
Principal Economic Advisor

2. External Drivers of Florida’s Economic Activity:
Slow Recovery Through 2012
Recessionary
Conditions in
E.U.
Global
Debt Burden of
Economic “Periphery”
Conditions
Growing
Emerging
Markets
2011-2012
Below Potential
Economic
National Growth
“Easy”
Economic
Monetary
Activity Housing Policy
“Overhang”
Slowly
Mending

4. Overview: The 2011-2012 Economic Environment, “May you Live in
Interesting Times”
 A prolonged period of below-potential economic growth in the
Nation, EU economies and US states/regions
 Highly constrained fiscal situation: “Doing More with Less”
 “Tax Revolt” in many states such as Florida: Just analyze recent
Florida and local election results
 Consumers and businesses “reliquifying” balance sheets, fiscal
sector-spending reductions
 Emphasis on productivity, cost controls and debt “deleveraging”

5. The “New Normal” Economy - Four Key Areas to Monitor at
National Level: Implications for Economic Activity in Florida
1 US HOUSEHOLD NET WORTH
2 FLOW OF FUNDS
3 MONETARY BASE
4 INTEREST RATES

6. US Household Net Worth: Consumers Paying Down Debt, Spending
Cautiously and in a “Bad Mood”
$70
$65
$59 $60 $60
$60 $57 $58
$55 $56 $55 $56
$52
$50
$40
$ Trillion
$30
$20
$10
$0
2007 2008 2009 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4
Source: Federal Reserve, Flow of Funds, Q4-2011, March 8, 2012

7. Flow of Funds
US Non-Financial Debt:
Consumers and Businesses “Deleveraging,”
Federal Debt Growing Rapidly,
End of “Stimulus” for State & Local Governments
State & Local
Years Households Business Federal
Governments
Financing and Housing “Bubbles”
2005 11.1 9.0 5.5 7.0
2006 9.9 11.1 3.7 3.9
2007 6.7 13.6 5.4 4.9
The “Great Recession” and the Aftermath
2008 0.1 6.2 0.7 24.2
2009 -1.7 -2.4 3.9 22.7
2010 -2.1 0.7 2.2 20.2
2011 -0.9 4.2 -1.9 11.4
Source: Federal Reserve, Flow of Funds, Q4-2011, March 8, 2012

8. “Helicopter Ben!”: Monetary Base at Record Levels
Monetary Base
(Excess Reserves of Banking System)
$2,800 $2.7 Trillion
$2,400
$2,000
US$ Billions
$1,600
$1,200
$800
$400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Federal Reserve Bank of St. Louis, Economic Research. Latest observations based from
April 4, 2000 to April 2012 . Shaded areas indicate US recessions.
8

9. How Low Can Short-Term Rates Go : Likely to Remain Close to
Zero Through 2012
Federal Funds Rate
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Federal Reserve Bank of St. Louis, Economic Research. Latest observations based from
January 2001 to April 2012 . Shaded areas indicate US recessions.

10. Economic drivers overall more positive: Florida’s economy starting to recover
slowly from a deep recession, but a return to strong economic growth unlikely
next 2 Years
Economic Drivers Outlook 2011-2012
 US Economy Modest growth in 2011 and into 2012
Top trade and investment partners of Florida
 Global Economy expanding, fueling demand for Florida’s goods
and services (trade finance, exports, tourism)
Stability returning, but still fragile, credit
availability is improving, but still tight for small
 Financial Markets
businesses and real estate (two key sectors of
Florida)

11. The U.S. and Global Economies under the “New Normal”
11

12. US Economic Growth Driver of Florida: Below Potential
Economic Growth Through 2012
Indicator 2009 2010 2011 2012F
Economic Growth (∆% Real GDP) -3.5 3.0 2.0 3.0
Inflation (∆% Core CPI/U) 1.7 1.0 1.7 1.6
Personal Income Growth (∆%) -4.3 3.7 5.1 5.5
Fed Funds Rate (Average) 0.16 0.18 0.1 0.25
Unemployment Rate (%) 9.3 9.6 9.0 8.0
Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve and UCF. Forecasts (F) by The
Washington Economics Group (WEG).

13. Global Economic Activity 2009-2012: Advantage to Florida of
Emerging Markets Expansion
Region/Country 2009 2010 2011 2012F
World Output (GDP), of which -0.6 5.3 4.0 3.5
Japan -5.5 4.4 -0.7 0.4
United Kingdom -4.9 2.1 0.7 0.8
Canada -2.8 3.2 2.5 2.1
FDI Flows
Euro Area, of which -4.3 1.9 1.4 -0.3 to Florida
Germany -4.7 3.6 3.1 0.6
France -2.6 1.4 1.7 0.5
Spain -3.7 -0.1 0.7 -1.8
Italy -5.2 1.8 0.4 -1.9
Developing Asia, of which 7.0 9.7 7.8 7.3
China 9.2 10.4 9.2 8.0
India 6.8 10.6 7.2 7.0
Source: International Monetary Fund, World Economic Outlook, Update July, 2011 and The
Washington Economics Group (WEG) for Forecasts (F).

14. Global Economic Activity 2009-2012: Florida Trade Activity
Expanding Strongly
Region/Country 2009E 2010 2011E 2012F
Latin America & the Caribbean, of which -2.0 6.1 4.6 5.0
Brazil -0.3 7.5 2.9 3.5
Mexico -6.3 5.6 4.0 3.5
Colombia 1.5 4.3 5.5 4.5
Dominican Republic 3.5 7.8 5.0 4.5
Chile -1.7 5.2 6.3 4.2
Peru 0.9 8.8 7.1 5.0
Argentina 0.9 9.2 9.0 4.0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Economic Survey of Latin
America and the Caribbean 2010 -2011 and The Washington Economics Group (WEG) for Estimates (E) and
Forecasts (F).

15. Florida - Slow Recovery from Recession: Real Estate Market
Correction and Slow Population Growth
Indicators 2009 2010 2011 2012F
Real Gross Domestic Product (Δ%) -2.0 2.0 2.5E 3.7
Personal Income (Δ%) -2.7 2.2 3.0 3.5
Population (Δ%) 1.1 1.4 1.0 1.3
Total Non-Ag Employment (Δ%) -6.1 -1.1 1.4 1.8
Exports Growth (Δ%) -18.0 22.0 20.0 18.0
Single-Family Home Median Price (Δ%) -24.0 -7.0 -1.0 5.0
Sources: BEA, Florida Agency for Workforce Innovation, Enterprise Florida, Inc. Florida Association of Realtors,
UCF and The Washington Economics Group (WEG) for Estimates (E) and Forecasts (F).

16. South Florida Moderate Recovery from Recession: Real Estate
Markets Improving, Growing Global Business, Visitors
Indicators 2009 2010 2011 2012F
Real Gross Domestic Product (Δ%) -3.1 2.0 2.5E 3.0
Personal Income (Δ%) -3.3 2.0 3.5E 4.0
Population (Δ%) 2.0 2.1 2.0E 2.0
Total Non-Ag Employment (Δ%) -6.2 -0.8 1.5 2.0
Exports Growth (Δ%) -9.1 18.0 19.0 15.0
Smaller Modest
Single-Family Home Median Price (Δ%) -24.0 -4.1
Decline Upturn
Sources: Bureau of Economic Analysis, Florida Agency for Workforce Innovation, Enterprise Florida, Inc. Florida
Association of Realtors, UCF and The Washington Economics Group (WEG) for Estimates (E) and Forecasts
(F).

17. Conclusions: What Keeps this Economist “Awake in Miami?”
Downside Risks to a Cautiously Positive Outlook for 2011-2012
 The need for a “soft landing” in the spending habits of the federal
government: Nov 2012 elections − ”Political Noise”?
 “Helicopter Ben,” “QE-3?” and “exit strategy” of the FED
 Public budgets and finance at state, local levels and in EU
 Energy dependence and possible pick-up in inflationary expectations
 In Florida, counties with a diversified economic base will perform
better than counties that depend on population-driven economic
activity
Advantage South Florida Region

18. Other-than-above risks, 2011-2012 likely to show
a slowly improving business environment relative
to last 3 years. Implement your business plan,
take advantage of growing business
opportunities, but monitor carefully the downside
risks and keep business plans flexible under this
”New Normal” economy of 2011-2012!