Sunday, May 27, 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
An American Airlines passenger was refused beer - so he screamed, fought and spit blood, FBI says

An American Airlines passenger was refused beer - so he screamed, fought and spit blood, FBI says

It began, as so many plane debacles seem to, with strange sounds in the bathroom.They were the noises of Jason Felix, one of the passengers on Wednesday’s American Airlines flight out of Saint Croix, according to a FBI affidavit recounting events lea...
Published: 05/26/18
Is the Lightning’s Jeff Vinik the best owner in professional sports?

Is the Lightning’s Jeff Vinik the best owner in professional sports?

Hope of another Stanley Cup has dissolved, and soon the ice will follow. Yet even if sorrow is the price of devotion, the true hockey fans will still buy in when the next season comes around. That concept may not be unique to Tampa Bay, but it does ...
Published: 05/26/18
Five members of 69ers motorcycle gang indicted on federal charges

Five members of 69ers motorcycle gang indicted on federal charges

Last year three members of the 69ers Motorcycle Club gang were implicated in the execution of a rival gang leader in the middle of rush hour traffic in Pasco County.Now those three and two other 69ers members have been indicted on federal charges tha...
Published: 05/25/18
With makeover, ZooTampa at Lowry Park takes a page from the theme parks

With makeover, ZooTampa at Lowry Park takes a page from the theme parks

TAMPA — Behind the construction walls near the carousel at ZooTampa at Lowry Park, hammers, saws and power drills made a racket in the blazing Friday heat. A raft full of 100-pound water jugs took test trips on the new Roaring Springs ride set ...
Published: 05/25/18
U.S. news outlets block European readers over new privacy rules

U.S. news outlets block European readers over new privacy rules

LONDON — U.S. news outlets including The Chicago Tribune, The Los Angeles Times, The Orlando Sentinel and The Arizona Daily Star abruptly blocked access to their websites from Europe on Friday, choosing to black out readers rather than comply with a ...
Published: 05/25/18
Tampa Electric appeals OSHA findings for October accident

Tampa Electric appeals OSHA findings for October accident

TAMPA — Tampa Electric Co. is appealing a recent citation by federal regulators. The Occupational Safety and Health Administration hit the utility with a $76,050 fine and a "serious" violation in April following its investigation into an accident in ...
Published: 05/25/18
Fiat Chrysler recalls 4.8 million cars, warning owners: Don’t use the cruise control

Fiat Chrysler recalls 4.8 million cars, warning owners: Don’t use the cruise control

Associated PressDETROIT — Fiat Chrysler is recalling 4.8 million vehicles in the U.S. because in rare but terrifying circumstances, drivers may not be able to turn off the cruise control. The company is warning owners not to use cruise control until...
Published: 05/25/18
Federal Reserve chairman warns his agency must be free from political pressure

Federal Reserve chairman warns his agency must be free from political pressure

Associated PressFederal Reserve Chairman Jerome Powell warned Friday that the Fed’s independence from political pressure must be respected if it is to succeed in controlling inflation, maximizing employment and regulating the financial system. His re...
Published: 05/25/18
Restaurants like Ford’s Garage use the experience to get you in the door

Restaurants like Ford’s Garage use the experience to get you in the door

Tim Butler’s first car was a Ford Model A pick-up truck — a pearl fawn and cherry red pick-up he got his senior year in high school from his dad, who renovates antique cars. That’s why as Butler waited for a table at the Ford’...
Published: 05/25/18
St. Petersburg man fined $507,513 in penny stock scheme

St. Petersburg man fined $507,513 in penny stock scheme

TAMPA — A St. Petersburg man was fined $507,513 and permanently barred from participating in the offering of a penny stock in a case involving a scheme to manipulate the price of Aureus, a penny stock company incorporated in Nevada, officials said Fr...
Published: 05/25/18