Federal Reserve Puts Ears To Streets To Gauge Economic Impact Of Gulf Oil Spill
Written by Miami Today on June 3, 2010
By Zachary S. Fagenson
Nearly all of Florida holds its breath hoping the massive oil spill in the Gulf of Mexico won’t inundate the state’s beaches, Federal Reserve Bank officials are putting their ears to the streets in hopes of gauging what the effect of the oil slick, and other large events, will be on Florida.
"We’re tracking [the spill] on a daily basis," said Juan del Busto, head of the Federal Reserve Bank of Atlanta’s Miami branch. "Through state officials, we’re looking at it through some contacts we have at the gulf council.
"Any sources, contacts we make from all the various sectors are very important to us," he added.
The Miami office is specifically assigned to track events that could affect tourism and travel throughout the Southeast.
"One thing we heard from one of our sources is that if [the oil] hits any of our beaches in the state of Florida it could have as much as $10 million per day impact on the state," he said.
Florida is in the Federal Reserve System’s sixth district along with Alabama,
Georgia, portions of Louisiana, Mississippi and Tennessee. Fed officials in each of the bank’s local offices send information they gather to their supervising regional offices by 2 p.m. daily, Mr. del Busto said.
The agency speaks with such tourism officials as William D. Talbert III, president and CEO of the Greater Miami Convention & Visitors Bureau, and Nicki Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau.
But the central bank’s regional offices seem to serve mostly as collection points for the information.
"As far as us doing any specific economic model I’m sure in the future we’re going to maybe do something about the impact," Mr. del Busto said. "While [the spill] is still going on we’re tracking it."
Meanwhile, the oil spill isn’t the only issue the Fed is keeping a sharp eye on.
"One of the things that we’re tracking, and again with various contacts, is commercial real estate," he said.
The Fed reaches out to some of the industry’s biggest names here including Jack Lowell, managing director of Flagler Real Estate Services; W. Allen Morris, chairman, president and CEO of the Allen Morris Co., and others.
"Not to paraphrase their comments, but commercial real estate is still an issue," Mr. del Busto said. "Vacancies are up, rates are down, there’s a lot more space that needs to be leased out and more availability than we’ve had in a while.
"And of course major projects are on hold."
Atlanta Fed President Dennis Lockhart expressed the agency’s concern for potential defaults on commercial paper during a visit to Miami early last year.
And while the Miami office has only "anecdotal evidence" on the state of commercial real estate in Miami, Mr. del Busto said, "we’ll probably do an impact study" that will be given to Mr. Lockhart to present during a future meeting of the Federal Reserve System’s open market committee, which monitors the nation’s open market system.