By Brianna Price
Today we welcomed over 150 people to Polk State College to host our 15th Annual East Polk Economic Summit. Guests heard from Kate Warne, PH.D., CFA., Principal Investment Strategist with Edward Jones and Merle Bishop, Growth Management Department Director with the City of Winter Haven. Kate addressed looming questions when it comes to making sense of today's economy and Merle gave us a look into Winter Haven's growth indicators and progress since 2017.
Kate Warne - Edward Jones
As a Principal Investment Strategist with Edward Jones, Kate pieced together the many moving parts of today's economy and investing. She shared 4 strategies for our current economic cycle:
Kate explained that today, the bull market is continuing to move forward, but at a slower pace than past years. With the market slowing down, but not decreasing, it is important to set realistic expectations for investments and be prepared by making adjustments to portfolios. While doing these things, one should also keep a long-term perspective, always staying ahead of trends and keeping the end goal in mind.
The economic growth in the United States is steady and solid. When the economy experiences a period of above average growth, it tends to be followed with a slower pace. With a slowing economy, she gets asked about unemployment rates. The job market is expected to experience steady growth, but might get tighter as time goes on.
In regards to fixed income, as rates continue to rise the fixed income becomes lower. According to Kate's graphic, from 1962 to 1981 the average annual bond return was 3.0% and from 1981 to 2017 the average annual bond return was 7.8%. With this in mind, Kate reiterated the importance on being realistic on returns.
"Are we due for another correction?" This is a question that many people ask and want answers to. While Kate expects volatility, she expressed that there is no reason to panic. Around one correction occurs each year and these corrections can be used as an opportunity. Individuals have the chance to buy on the dip and possibly see a return on their investment down the road. It's all about the long-term perspective!
After regaining strength since the last recession, the United States has seen a calm period in the economy. But what ends the calm? Kate shared that policy risks, deficits, inflation, geopolitical conflicts and other aspect of the economy can cause volatility. Typically, these aspects are short term worries and will not effect the end goal.
Kate asked the audience if they were concerned about the United States' debt and, as you can imagine, every hand in the room went up. She went on to share that the debt is growing and is projected to increase this year with the tax cuts driving it. In 2017, government spending was at $4 trillion. There are only two solutions to this issue - the government either spends less money or raises taxes.
When considering an investment portfolio, Kate believes that the best way to have successful investments is by creating a diversified portfolio. When there is a variety of different stocks and bonds, it is more likely that there will be a return on the investment. Diversifying a portfolio could mean adding bonds, having a little more cash and even investing internationally. Portfolios that hold these items are more likely to produce positive results.
"Don't play politics with your portfolio." After yesterday's elections, many people wonder if politics will play a role in the success of their investments. Kate assured everyone that there is less impact from the election than most people expect. Under every combination of political party control, between the executive and legislative branches, the economy has preformed well.
As Kate presented all aspects of our economy, she concluded that the bull market will continue, earnings will continue to rise, a recession is not a current expectation, international opportunities are important and everyone should always think long-term when it comes to investments.
Merle Bishop - Growth Indicators
After hearing a very broad view on the economy from Kate, Merle Bishop shared a local perspective. Winter Haven is growing quickly and you could feel Merle's excitement to share the information behind that growth.
In 1970, Winter Haven had a population of 16,136 people within the city limits. Fast forward to 2018 and Winter Haven is home to 42,828 people. Much like the economy, after rapid growth, the rate of growth is assumed to slow down. Even factoring in a slower growth rate, Merle estimates that Winter Haven could still end up with 45,000 people by 2020 and 60,000 by 2030.
When we look at the state as a whole, there has been a 2% growth rate in the Florida population. In comparison, Winter Haven outpaced Florida with a 4.1% growth rate from 2016 to 2017. If you take a look at where Winter Haven falls in relation to Lakeland and Polk County, you will see that from 2010 to 2018 Winter Haven has grown by 26.4% compared to Lakeland's 8.4% growth and Polk's 11.8%.
Florida Trend recently published an article that claims that there are 919 new Floridians every single day! To put that into perspective, Merle estimates that there are 4+ new people to Winter Haven per day, in other words, 141 new people to Winter Haven every month (includes births).
Davenport routinely outpaces the rest of the county as a percent of their population due to growth in the 4 corners area. However, as you can see below, Winter Haven outpaced in number of people.
Building Permit Activity
Winter Haven's building activity continues to increase with an anticipated 800 permits to be issued by the end of 2018. The all time high for permits in Winter Haven was in 2005 with a little over 900 permits issued. As Winter Haven continues to grow, we get even closer to creating a new all time high for building permits.
If you had to guess, where do you think the development is happening? Surprisingly, most of the new development is happening within the City limits versus in unincorporated Winter Haven. Merle pulled statistics on new water meter installations as an indicator, and that shows that 88% of new installations are within the City limits.
At the end of September 2018, there were 32 projects filed with the City of Winter Haven with a construction value of $240,510,731. Merle anticipates several more site plans to be filed before the end of the year.
Winter Haven showed a taxable value increase of 23.3% from 2017 to 2018. The Florence Villa CRA district almost doubled in its taxable value. Properties in the Downtown CRA experienced a 77% increase in value.
With 383 MSA in the United States, the Winter Haven - Lakeland MSA was moved up to 14th on Forbes list of America's Fastest Growing Cities. According to the Milken Institute, Winter Haven was ranked as #11 in high-tech GDP growth in 2016. Our community continues to strive to be more technologically advanced in our schools, government, recreation and more.
The development activity in Winter Haven is staggering. Merle shared a map of the private development activity within the City limits (below). "This map speaks to the success of Winter Haven and the quality of life that it brings to visitors and residents alike," he said.
The future for Winter Haven is bright! As our population grows, development activity continues and community relationships strengthen, Winter Haven will continue to be THE place to stay, play and live.
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