The U.S. economy has entered a "New Era" where international trade, outsourcing and new computer and telecommunication technologies are allowing the economy to grow faster without igniting higher inflation. Vitner says in his Southeast Regional Economic Review that many characteristics of the new economy are central to the South's economic well-being.
"The Southeast's economy continues to speed along in high gear, and I don't see that changing anytime soon," Vitner said. "Strength is evident from the District of Columbia's booming suburbs, where hiring by Internet and telecom-related businesses has driven unemployment down to 3.4 percent, to southern Mississippi, where gaming and energy exploration have helped cut unemployment to its lowest level in 20 years."
Vitner said the Southeast exemplifies the New Era's most distinguishing feature - that low inflation and low unemployment rates can co-exist. The unemployment rate in the Southeast is currently just 4.6 percent, while over half of the region's major metro areas have jobless rates below 4 percent.
Despite the low jobless rates, wage cost pressures and inflation remain moderate, Vitner said. Average hourly earnings are not rising any more rapidly in the Southeast than elsewhere in the country, and the region's Consumer Price Index has actually risen less -- climbing just 1.8 percent over the past year compared with a 2.2 percent increase nationwide.
Some companies in the Southeast are experiencing difficulty finding enough qualified workers, especially in rapidly growing fields such as software development and telemarketing. Construction workers also are in short supply -- especially in Atlanta, Raleigh and Orlando -- and retailers have had difficulty replacing workers who have jumped to higher paying jobs.
While activity has picked up throughout the Southeast, growth is best in areas where factors driving the New Era have the greatest influence - such as in Northern Virginia, Raleigh, Atlanta and regions in Florida.
Northern Virginia
The northern Virginia suburbs have re-emerged as one of the Southeast's fastest growing areas thanks to booming business at telecom firms, software developers and Internet-related businesses such as America Online, PSINet and CyberCash. Telecom companies, alone, have added more than 5,000 jobs in Northern Virginia over the past three years.
Though government cutbacks initially hampered Northern Virginia's recovery, the new way of doing business in Washington is now a powerful stimulus. With slimmer payrolls from government cutbacks, many agencies have outsourced more of their operations, helping fuel growth at data processing firms and area research labs.
Atlanta
Globalization plays the most significant role in Atlanta's economy today. A host of international companies announced major investments during the past year and longtime players, such as Seimans, Matsushita and Yamaha, recently expanded existing operations. In addition, Atlanta-based firms such as the Southern Company, UPS and Coca-Cola are expanding their international presence.
Growth in outsourcing services also has boosted Atlanta's economy. Job growth in professional services topped 4 percent last year, with some of the fastest growth in data processing and computer services. Atlanta's high-tech sector is one of the city's best kept secrets. The metro area is home to the South's second largest high tech work force, due to the presence of such companies as BellSouth, Scientific Atlanta, Lucent, IBM and Hewlett Packard.
Charlotte/Raleigh
Charlotte is not traditionally thought of as a New Era economy, but more than 350 international companies have major operations in the metro area. Exports from Charlotte-based firms have grown more than one-third over the past three years. New jobs in the financial sector have cut downtown office vacancy rates from the mid teens in 1993 to under 7 percent. Charlotte also is developing a high tech niche in transportation and distribution software, led by such companies as Metasys, which develops software for local manufacturers and shippers, and WCSS, an IBM subsidiary which develops software for warehouse and distributor firms.
Job growth in Raleigh has averaged better than 4 percent over the past five years. Hiring has been fueled by explosive growth in the region's high tech community, especially Internet and telecom-related companies such as Cisco Systems, Northern Telecom and Ericsson.
Florida
In South Florida, several major corporations have either moved or established their Latin American headquarters in the Miami area in recent years. In addition, several entertainment companies, including the Discovery Channel, MTV, Sony and MCA, have built production facilities in the area to produce and market music and television programming for Latin America.
In Tampa, an economy which once was dependent upon securing inflows of retirees, tourists and defense contracts, is now flourishing from a mix of high tech start-ups, corporate relocations and international trade. Nearly 200,000 jobs have been created in the Tampa region over the last five years, cutting the unemployment rate to just 3.4 percent. Home building has rebounded and office vacancy rates have tumbled to their lowest levels in more than a decade.
In Jacksonville, job growth is up 4.2 percent over the past year - one of the best gains among the nation's major metro markets. The city ranks among the nation's leaders in attracting customer service and back office operations. A state-of-the-art fiber optic cable network and aggressive development efforts have helped the city gain that distinction. The growing importance of international trade is giving a boost to Jacksonville's port. That should continue as a $100 million upgrade is under way to increase container ship and bulk cargo capabilities.
Charlotte-based First Union Corporation is the nation's sixth-largest bank holding company with assets of $144 billion as of Sept. 30, 1997. The company serves approximately 12 million customers throughout the East Coast and nation.
-- FTU --
Editor's Note: A full report of Mark Vitner's Southeast Regional Economic Review is available on First Union's Internet site.
