Wednesday, February 21, 2018
Business

Economist says Florida's recovery looks better than reality

Economist Mark Vitner doesn't want to pop the party balloons celebrating Florida's burgeoning recovery, but his latest forecast certainly takes some air out of the celebration.

Rising home prices, beefier 401(k)s and even dramatically falling unemployment statewide have all been driven to a large extent by the Federal Reserve's push to keep interest rates low, said Vitner, a Wells Fargo senior economist. Florida's economy might not hold up as well, he said, once the Fed decides the country's economy is on a solid path and allows interest rates to rise.

Moreover, many of the newly created jobs are still in lower-paying industries such as tourism, retail, temp work and home health care. Also, Florida has yet to feel the brunt of mandated federal budget cuts, and economic problems from Brazil to Europe threaten to curtail foreign tourists and investment here by year-end.

Perhaps most sobering: Despite being one of the leaders in job creation year over year, with its unemployment rate dipping below the national average, Florida still has a long road to full recovery.

"We have regained less than half the jobs lost in the recession, even though we've seen one of the highest job gains in the country," said Vitner, who has tracked Florida's economy for more than 20 years. "It will take Florida longer to recover the jobs it lost in the recession than it does for the country as a whole."

The Federal Reserve has been buying $85 billion worth of Treasury bonds and mortgage-backed securities every month, an unconventional program that increases the monetary supply and keeps short-term interest rates low to encourage borrowing. The Fed hasn't given a specific time for easing back on the program, but even talk of slowing the program is already causing interest rates to rise.

Vitner said the Fed's policy has caused economic growth to be one-third stronger than it would have otherwise been the past four years. That means Florida would have added only 400,000 jobs since the recession ended, rather than the 600,000 added so far.

Vitner said he doesn't want to diminish what the Fed has accomplished. Certainly, keeping interest rates low has helped households by fueling a rise in home prices and a run-up in the stock market.

"The key question is what happens when the effects … diminish, as we think they will over the next few years," he said.

Among other observations in his economic outlook are these:

• Florida has accounted for 6 percent of the jobs added nationwide since 2010.

• After the housing boom, bust and modest recovery, Florida home prices are back in line with the national average.

• Florida exports have slowed in recent months, reflecting slower economic growth in some key international markets.

• Homeownership continues to fall at a time when home prices are rising. That could hurt prices when institutional investors and speculators decide to sell.

"It's hard to imagine we had a sustainable recovery in housing under way when we have fewer homeowners," Vitner said.

Over the long haul, Vitner is still a believer in Florida's potential to draw both retiring baby boomers and companies seeking a pro-business climate. He's particularly keen on Orlando (which has done the most to create jobs organically instead of relying on the state's population growth), as well as Tampa Bay, the state's top job creator over the past year.

"Tampa is well positioned for a rebound," he said. "Housing remains remarkably affordable, and the region is attractive for corporate relocations and expansions. Financial services, professional services, construction and wholesale trade and distribution will help drive growth during coming years."

Jeff Harrington can be reached at (727) 893-8242 or [email protected]

Comments
Career Q&A: Nut allergy is a serious workplace concern

Career Q&A: Nut allergy is a serious workplace concern

Q: My manager has recently started eating nuts at her desk, which is located right next to mine. Unfortunately, I have a serious nut allergy, so any contact with them could produce a life-threatening reaction. Even foods which contain tiny pieces of ...
Published: 02/20/18
Yes, we have some bananas: Port Tampa Bay welcomes first shipment in 21 years

Yes, we have some bananas: Port Tampa Bay welcomes first shipment in 21 years

TAMPA — More than two decades after the last bunch arrived on shore, bananas are back at Tampa’s port. More than 3,900 pallets of Chiquita bananas from Ecuador arrived last week at the new Port Logistics Refrigerated Services warehouse.It was the fir...
Published: 02/20/18
Guess co-founder steps aside after allegations from Kate Upton

Guess co-founder steps aside after allegations from Kate Upton

Associated PressNEW YORK — Guess Inc. says that co-founder Paul Marciano will give up his day-to-day responsibilities at the clothing company until a sexual misconduct investigation is completed. Model and actress Kate Upton told Time magazine earlie...
Published: 02/20/18
Grocery retailer Albertsons to buy drugstore chain Rite Aid

Grocery retailer Albertsons to buy drugstore chain Rite Aid

Associated PressThe privately held owner of Safeway, Vons and other grocery brands is plunging deeper into the pharmacy business with a deal to buy Rite Aid, the nation’s third-largest drugstore chain. Albertsons Companies is offering either a share ...
Published: 02/20/18
Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

Following deaths from Irma, Florida looks to new rules for keeping nursing homes cool after outages

After national headlines and a public outcry over the deaths of 14 people at a Broward County nursing home after Hurricane Irma, nursing homes across the state are working to comply with new rules requiring them to have back-up power.But the process ...
Published: 02/20/18
Yoshi — car maintenance that comes to you — launches in Tampa Bay

Yoshi — car maintenance that comes to you — launches in Tampa Bay

A California-based company that promises to bring limited on-site car maintenance directly to you — from an oil change to a fill-up — has picked Tampa Bay as its next pit stop."Anything that your car needs, we’re going to bring to you," said Nick Ale...
Published: 02/20/18

Hernando Business Digest for Feb. 23

Business digestEventsCHAMBER RIBBON-CUTTINGS: The Greater Hernando County Chamber of Commerce will have two ribbon-cuttings in the coming week:• Access Health Care Physicians/Dr. Janice Rodriguez, 5290 Applegate Drive, Spring Hill, 10 a.m. Feb. 23. C...
Published: 02/20/18

Pasco Business Digest for Feb. 23

Business digestBrieflyLOCAL COMMUNITY RECOGNIZED: CHUY’S RESTAURANT TO OPEN: Chuy’s, the Austin-based Tex-Mex restaurant, will open its first Tampa Bay area location this spring near Cypress Creek Town Center in Wesley Chapel. The restaurant at 25750...
Published: 02/20/18
Steve Wozniak charms USF crowd: ‘The human or the technology — what’s more important?’

Steve Wozniak charms USF crowd: ‘The human or the technology — what’s more important?’

TAMPA — Steve Wozniak, the inventor of the Apple personal computer, is the tech genius who sounds less like an engineer, more like a philosopher.Startups? They can be a lot of fun — if started up for the right reason."The purpose should never be, thi...
Updated: 1 hour ago
Epilogue: Tourism community remembers Paradise founder Cedar Hames

Epilogue: Tourism community remembers Paradise founder Cedar Hames

When Cedar Hames spoke, you listened.He was a natural storyteller, always dressed sharp to match his wit and natural elegance. He grew a two-person business in St. Petersburg into a leading tourism, advertising and marketing agency over an esteemed 3...
Published: 02/19/18
Updated: 02/20/18