Congratulations. The recession is over.
Uncle Sam (a.k.a. the Department of Commerce) reported Thursday that the economy grew at a 3.5 percent pace in the third quarter, the first positive upswing in 15 months.
But few are buying the argument that our economic winter has ended, particularly in Florida. Not with rising, double-digit unemployment and surging credit card defaults.
The increase in economic output was fueled by one-time government stimulus programs boosting auto and home sales. It benefited from comparisons to the third quarter of 2008 when credit markets seized up and the country's biggest financial institutions were in disarray.
Nonetheless, it was a bigger increase than expected and enough to fuel optimism, albeit tempered. "This is just the beginning," Treasury Secretary Tim Geithner said Thursday, adding, "The recession is still alive."
Robin Miller of Bradenton echoes that last sentiment. Miller, his wife and two of his children have all been laid off during the downturn.
"Last I looked, there's still more layoffing than hiring," said Miller, 57, "and all the hiring I've seen is for really crummy jobs."
Five signs we are waiting for to indicate real recovery is under way in Florida
Rising unemployment looms as arguably the single-biggest threat of 2010. Nationally, unemployment is expected to peak at 10.5 percent next year. In Florida, where unemployment is now at 11 percent, it's projected to peak near 12 percent. To be truly healthy, the rate should be south of 6 percent. Rebecca Rust, chief economist with the Florida Agency for Workforce Innovation, says for Florida that point may be eight or nine years away. Most would welcome just a return to single digits, which itself may be more than a year away.
Small businesses are growing
The credit freeze that paralyzed small business lending a year ago has thawed in recent months. But lending volume is still far shy of prerecession levels. A July survey by the Federal Reserve found that 35 percent of banks had tightened lending to small firms and 79 percent of small business owners reported that their credit card lines had been cut significantly. For the Small Business Administration's fiscal year that just ended Sept. 30, business loans were down 43 percent in the Florida district that includes most of the Tampa Bay area.
Florida's housing pipeline ramps up again
Home prices have inched up slightly in recent months, though still down more than 40 percent from the 2006 peak. It's hard for Florida's housing industry to gain traction until foreclosures abate and retirees up north can sell their homes and relocate. A recent mortgage applications survey from the Mortgage Bankers Association showed a large decline in applications for both new mortgages and refinancing. Chris McCarty of the University of Florida's Bureau of Economic and Business Research said that suggests home sales and possibly prices may fall anew once the first-time homebuyers tax credit expires in December.
Banks stop bleeding loan losses
Top financial companies tethered to trading stocks and bonds, like Goldman Sachs and JPMorgan Chase, are posting hefty profits again. But recovery has been more muted for many large, regional and community banks heavily invested in commercial real estate loans. This week's bankruptcy filing by huge office building lender Capmark could presage a long-anticipated wave of commercial real estate losses. It's one reason there has been a recent upswing in bank failures (now up to 106 nationally) and the tally is expected to grow.
Retail sales pick up
For the first time in a year, the International Council of Shopping Centers reported a very tiny increase in retail sales for top stores in September — 0.1 percent. But shoppers aren't expected to return to their free-spending ways anytime soon. Store owners anticipate the second-worst holiday shopping season in 30 years. (Last season was the worst.) In a survey released Thursday, Consumer Reports said 65 percent of Americans plan to cut back on holiday expenses such as gifts, travel and entertaining.
Jeff Harrington can be reached at email@example.com or (727) 893-8242. Follow him on Twitter at twitter.com/jeffmharrington.