Economist Says Recession Hits Florida Harder (4/3/2008)

Florida's struggling housing industry and slumping employment rates signal recession for the Sunshine State, says a University of Central Florida economist. And relief won't arrive anytime soon.

"Florida's economy benefitted tremendously from the housing boom, but the credit crunch is prolonging the recovery from the housing hangover," said Sean Snaith, director of the UCF Institute for Economic Competitiveness. "It will take Florida much longer to recover than other parts of the country."

Snaith's state and regional forecast released today provides a comprehensive look at Florida and 12 metropolitan regions through 2010. Those areas are Daytona Beach, Fort Myers, Gainesville, Ocala, Lakeland, Palm Bay-Melbourne, Pensacola, Miami, Jacksonville, Tallahassee, Tampa Bay and Orlando.

Revised employment numbers released this month also offer a much gloomier outlook for Florida's economy, Snaith said.

"The revised employment data for 2007 showed that we were losing jobs from August through the end of the year," he said. "The new picture this painted was not an economy bearing the burden of the housing bust, but rather an economy brought to its knees under the weight of this correction."

Even for Floridians with steady jobs, the next few months could mean skyrocketing costs at the gas station, more expensive air-conditioning bills and larger totals at the grocery line checkout.

"Record highs for energy prices, coupled with surging property taxes and property insurance rates, will continue to be a drain on Floridians' budgets," Snaith said. "Payroll job losses will stop by the end of 2008, but we will not witness a return to the sort of job growth we are accustomed to here in Florida until the year 2010."

To view Snaith's full report, go to www.iec.ucf.edu.

Other highlights include:

• Even with the housing correction, Orlando remains a "bright spot" in Florida's economy and will be one of the leaders in the state in employment and population growth through 2010. Those parts of the state where housing demand was driven primarily by investors will suffer the most until the housing market rights itself.
• Housing starts hit their nadir in 2008. By 2010, though, starts will have recovered but at levels that will be half the peak reached in 2005.
• Unemployment rates rise through the first half of 2009, stabilizing at 5.3 percent before declining slightly in 2010.
• Job losses in the construction sector could approach 83,000 by the end of 2009, after which a slow, deliberate recovery is expected to begin.
• Energy prices will continue behaving in an unusual manner -- they will keep rising. And as the summer driving season rolls around, the surge in price will begin from an already high platform, making $4 per gallon a "real possibility."
• Retail sales will contract in the second quarter of 2008, and then jump during the summer -- thanks to tax rebate checks -- before decelerating through the second quarter of 2009. Over the 2009-2010 time frame, though, retail sales will grow at an average pace of 5.7 percent.

Snaith is a national expert in economics, forecasting, market sizing and economic analysis. He authors quarterly reports about the economy. Snaith is also a member of several national forecasting panels, including the Western Blue Chip Economic Forecast panel, the National Association of Business Economics Quarterly Outlook Survey Panel, the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters, Bloomberg U.S. Economic Indicator Survey and USA Today Economic Survey Panel. Blue Chip named him the most accurate forecaster for California in 2006.

Note: This story has been adapted from a news release issued by the University of Central Florida

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