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Florida winning very slow race to economic recovery
ORLANDO, Fla. – July 30, 2010 – The Gulf oil spill hasn’t ruined Florida’s economic
recovery and the modest growth will continue this year, according to a new report.
While the oil crisis dealt a blow to the Panhandle tourism industry, it won’t be
enough to stop the Sunshine State’s economy from growing 2.9 percent this year, a
University of Central Florida forecast said. Even so, the report predicts recovery at
snail’s pace both statewide and in South Florida as employers resist hiring and real
estate values remain depressed.
“I’m still calling it a gravy-boat recovery – a gradual, tapered recovery and not a V-
shape,” said the study’s author, UCF economist Sean Snaith. “Nothing’s really going
to start percolating until 2011, and maybe the first quarter of 2012.”
Snaith’s call for a modest yet uninterrupted recovery mostly meshed with a new
report out from the Federal Reserve that showed economic growth continued across
the country. Yet there were troubling signs in the Fed’s latest Beige Book report,
with evidence of spending slowdowns particularly evident in the South.
“It does reiterate that the economy is not bouncing back as much as we would
hope,” Ryan Detrick, senior technical strategist chairman of Schaeffer’s
Investment Research, said of the Beige Book.
Of the 12 economic districts covered in the Beige Book, only two reported a
slowdown in economic growth: Chicago and Atlanta, which includes Florida.
Miami got one mention in this Beige Book, with the authors noting that hotels
report an uptick in convention bookings and business travel. That trend has been
apparent all year, and is helping drive a strong rebound in lodging revenue and
occupancy rates across South Florida.
The Sunshine State received an outsized share of mentions in this Beige Book
because of the Gulf oil crisis. The authors noted “significant concerns” over the spill’
s impact on tourism.
There were positive signs mixed with discouraging news. Across the Atlanta region,
businesses are adding hours to payroll without hiring new workers. Retailers
reported a slight increase in sales, but were less optimistic than when they were
during interviews for the June Beige Book.
Residential real estate sales also slowed, and people in that industry had a
“pessimistic” outlook. Even so, Florida was singled out as having declining housing
inventories while unsold homes increased elsewhere in the district.
The Beige Book became public just hours after Snaith released his report, and the
combination captured the uncertainty facing economic forecasting this summer.
While the recovery seemed to be gaining traction this spring, a series of
disappointing reports have raised doubts about the momentum.
The Fed’s outlook followed Snaith’s mostly glum economic report that nonetheless
predicted growth this year and for the rest of the decade.
Snaith predicts incomes across South Florida will grow this year and for the rest of
the decade as the region crawls toward a slow recovery.
“It’s a fairly flat profile a while,” Snaith said.
Statewide payrolls won’t return to their pre-recession levels until 2014 and in two
years housing starts will only rebound to where they were in 2001, Snaith wrote.
“Consumers in Florida have been beleaguered, much more so than their
counterparts around the country, by disappearing home equity and an evaporation of
stock market wealth,” Snaith said.
Still, the report reinforces the consensus of economists across the country that, by
the math, the recession has passed and a fragile recovery has taken hold. For the
combined economies of Palm Beach, Broward and Miami-Dade, Snaith’s forecast
predicts mostly positive numbers through the decade.
Real personal incomes in South Florida should grow 2.5 percent this year after three
straight years of declines, the report said. That’s despite a 1.3 percent decline in
employment, with job growth expected to flatten next year and then hit a modest
stride of 2.3 percent in 2012.
Snaith’s report also said the BP oil disaster will put off a full recovery in Florida’s
tourism industry by at least a year. He doesn’t expect statewide employment in
leisure and hospitality to grow until 2012, defying more optimistic predictions before
the spill.
“This was supposed to be the time that tourism was finally going to emerge from
under the cloud of that recession and begin to recover,” he wrote.