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What do the numbers say about Florida's economic future?

It's tough to find a more devoted, long-term watcher of Florida's economy than Mark Vitner.

The economist worked at Florida's once-dominant Barnett Banks in Jacksonville, then continued his Sunshine State number-crunching analysis from Charlotte, N.C., at First Union, which became Wachovia, which in turn became Wells Fargo this year.

Vitner recently offered up intriguing insights into Florida's roughed-up economy. He says the Florida recession ended between June and September of last year, though many Floridians certainly may not feel the economic love just yet.

He says the still-rising unemployment rate in Florida, now 12.3 percent, may be due as much to the state's growing (yes, growing) labor force as it is to people actually losing their jobs. Here are some highlights of his remarks and followups to questions.

Why is the national unemployment rate at 9.9 percent while Florida's is so much higher?

Florida's labor force has grown much faster, even though the state's population growth has slowed. Without that growth in labor force, you would not see such dramatic increases in the unemployment rate. So the unemployment rate in Florida may be somewhat overstated.

But you see signs of improvement in Florida's job market?

It's clear the economy has turned. Florida added 30,600 jobs in the first quarter. But do not expect that rate to continue over the course of this year.

How big a hole is Florida in from this recession?

We've lost over 800,000 jobs. One quarter of those losses are in construction, with another 10 percent in manufacturing, 10 percent in financial services, 10 percent retail and 5 percent in wholesale trade.

Has Florida ever been hurt so badly in past recessions?

The next closest recession was in 1973-1975. That was the last great recession to see Florida real estate get as junked up as it is in this cycle. But in that period, Florida's economy was only one-third the size that it is today. So the problems in real estate then were greater. But this cycle has produced far greater job losses.

Will Florida's economy just eventually go back to the way it was?

There are two camps: folks who say we are in a new normal and others who say that's a bunch of nonsense, and we will get back to the way it was. We are in the camp that says we will not get back to the way things used to be. Credit will not flow nearly as freely. … And many folks still overburdened with debt will have to work that off.

You say construction took the biggest hit. How bad is it?

Over the course of the recession, peak to trough, construction has seen a decline of 326,000 jobs. That's 47.5 percent of Florida's construction base.

But construction is showing some life?

Construction employment is up over the last two months, though it is hard to make much out of two months. Plus, there are a wad of special factors given the first-time home buyer credits and foreclosure mitigation programs and federal aid to state and local governments. It seems the declines are behind us, though I do not see significant gains ahead. Employment will be up modestly over the course of this year.

Do you see pockets of strength?

Tech and defense have held up pretty well. We see a nice rebound in orders for communications and electronics, which make up the largest component of Florida exports.

Are Floridians less fearful about the economy these days?

Florida suffered a huge wealth loss when housing prices and the stock market tumbled, and with all the scandals in the state. Now that the stock market is back a bit, Floridians are less concerned about their personal finances. It's not that they are optimistic, but less concerned the decline will continue.

You have a state forecast?

This year, we're looking for modest growth with a gain of 2.6 percent in the gross state product, ramping up to 4 percent in 2012.

Any revival in the state's overall population ahead?

We expect population numbers to ramp up. We see a gain of 195,000 in 2012. But we probably will not get back to Florida-like numbers until the national economy strengthens, and it's easier for people to sell their homes in other parts of country at prices they find agreeable. Population numbers will pick up in latter 2012 and show up in 2013 or 2014 or 2015 when we'll see 250,000 or higher population gains per year.

Do you see some jobs and economic good coming out of the Tampa-Orlando high-speed rail project?

I do not want to seem like a doubter. I began following the Florida economy in 1984, and they talked about high-speed rail a lot back then. I would like to be here when we start moving the dirt. Certainly the size of this proposed Tampa-to-Orlando project is very large.

There's one thing I am not sure about. How much interaction is there between Tampa and Orlando? Most Florida metro areas are pretty independent. So I do not know what long-run benefit there will be in high-speed rail, other than the ability to move around congested areas. I will believe it when I see it.

What do the numbers say about Florida's economic future? 05/08/10 [Last modified: Friday, May 7, 2010 9:28pm]
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