Wednesday, May 23, 2018
Business

Headwinds buffet area economy despite brighter 2013 forecasts

If the new year is supposed to usher in fresh economic momentum in Tampa Bay and Florida, some businesses find it's doing so under their radar.

Area businesses speak of fresh "headwinds" buffeting their performances. Those winds come in the shape of lower paychecks due to the return in 2013 of the higher payroll tax, rising gasoline prices now hitting $4 a gallon at some area stations, longer delays in tax refunds and even the recent arrivals of credit card bills bloated by the holiday shopping season.

Others point to renewed uncertainty from the threat of automatic federal budget cuts that may ripple across the state economy in coming weeks. Still others warn the new uptick in Florida's minimum wage to $7.79 dampens the confidence of businesses to consider adding jobs.

Here's a sampling of what a few area business executives see as early 2013 hurdles, based on their recent conversations with Wall Street analysts and their company filings with the Securities and Exchange Commission.

• When will the White House and Congress get their act together? "If certain influential elected leaders can reach consensus on the proper way to manage today's 'crisis of the quarter' — that is the pending budget sequester — and give the American public hope that unbridled government spending will be curbed for the health of future generations, there is reason to believe that our economy may finally shift into a higher gear later this year," Highwoods Properties CEO Ed Fritsch told analysts this month. "That's a big gift, but certainly possible."

In Tampa, one Highwoods priority is to find fresh tenants for commercial space that PricewaterhouseCoopers will vacate at Tampa Bay Park (north of Raymond James Stadium) in May. Fritsch said Highwoods has relet 24 percent and has prospects considering another 65 percent.

• For this time of year, we are paying record prices for gasoline. Average area prices are sneaking over $3.80 as some stations already charge $4 a gallon. That's a problem.

"We are approaching 2013 with a bit more caution than we did 2012," said Liz Smith, CEO of Tampa's Bloomin' Brands (parent of Outback Steakhouse, Carrabba's and other casual dining chains). She told analysts last week that high payroll and gas prices are hitting at the same time her chains must contend with some sharp hikes in commodity prices. How sharp? Beef prices could rise 10 to 12 percent, pressuring the Outback steak chain's ability to manage costs and margins.

Similar challenges are echoed by Clarence Otis, CEO of Orlando's Darden Restaurants, parent of the Olive Garden and Red Lobster chains.

Otis says Darden made changes "to be more responsive to the financial realities of our guests" by making menus more affordable.

"Clearly, consumers have less discretionary income to spend on restaurant occasions right now and likely for the foreseeable future," adds Greg Levin, chief financial officer of BJ's Restaurants, a California chain expanding in Florida.

Not all is bleak. Florida's housing market is brightening in 2013. There's even talk that housing just switched from a buyer's to a seller's market.

But headwinds, defined as "winds opposing forward motion," persist. It's the one word tossed around that captures the tone of early 2013.

Robert Trigaux can be reached at [email protected]

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