After decades advising banks and other businesses at the center of Tampa Bay's financial community, Tampa securities lawyer Marty Traber is an old hand at reading economic tea leaves. Lately many of those leaves point to a slowdown, if not an outright recession. Traber senses it in the handful of community banks fighting over relatively few small-business loans. He hears it from New York advisers who caution against parking money in some short-term investments. He sees it in fewer capital expansions and refinancings as companies shun taking on more debt. "I'm busy at the moment but do I need (to hire) more people? No. Did I need more people this time last year? Yes," Traber says. "Something is cooking. I just don't know the severity of it." The last time the country was about to replace a lame-duck president eight years ago marked a rock-bottom financial point for a generation: the implosion of Lehman Bros. and Wall Street's ensuing collapse; massive bank and auto bailouts. This year, politi-speak is also filled with ominous predictions about the election's ramifications — even if few are predicting Great Recession Part II.
Indeed, Florida has crawled out of the 2007-2009 downturn much more diversified. Its banks are stronger, and it's on firmer real estate footing after years of restrained construction and tighter regulation. Statewide, tourism has been hitting record numbers. Florida's latest quarterly GDP growth topped 2 percent, outpacing the country and all but one state in the Southeast.
Yet, there are signs the economy is cooling off:
• Restaurant sales are sagging from fast-food to casual sit-down chains like those of Bloomin' Brands, the Tampa parent company of Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's.
• A University of Florida survey in late August found consumer confidence has tumbled to the lowest point of the year.
• Job creation among small companies was negative for the third straight month even as business owners reported a higher level of job openings they were unable to fill, according to an August report from the National Federation of Independent Business. William Dunkelberg, the NFIB's chief economist, has repeatedly blamed "heavy-handed government mandates" for discouraging businesses from making long-term investments.
• State economists recently warned lawmakers and Gov. Rick Scott there will be less money than they anticipated in next year's budget, and the year after that will be especially tight.
Earlier this summer, economists with JPMorgan Chase put the odds of a recession starting within 12 months at 37 percent, the highest point since the economic recovery began. Lenders have warned of rising delinquencies for certain credit card, student and auto loans.
University of Central Florida economist Sean Snaith said he's "increasingly concerned the U.S. economy is coming up on its next recession. … Twelve to 18 months out, I wouldn't be shocked at all if we saw a downturn."
Unlike the housing bubble that sparked the last recession, this time Snaith is fretting about the auto industry as a leading indicator. Pent-up demand for new cars and trucks after the recession coupled with easy credit and rising subprime automotive debt all give him pause, though he doubts it would have the same repercussions as did the mortgage industry blowup.
Given the textbook definition of a recession — two consecutive quarters of a contraction in the country's GDP — typically the declaration of a recession comes long after the country is already in one.
Since exiting the most severe recession since the Great Depression, the economy has been expanding for seven consecutive years. Some believe "we're due" for a recession on the basis of length alone — though there is precedent for long stretches of growth. In the 1990s, for instance, the country enjoyed a 10-year spurt of expansion fueled in the end by the dot.com bubble.
Scott Brown, chief economist of Raymond James Financial in St. Petersburg, remains bullish, particularly for Florida, whose economy has outshined most of the country. Yet after this extended recovery, Brown said, there is a chance of "talking ourselves into a recession" as worried consumers stop traveling and shopping as freely and companies hold off on big expansions.
Some of that is happening already.
Tampa Bay's biggest public company, IT products distributor Tech Data Corp., is often viewed as an economic bellwether because it can detect early on when companies and consumers pull back from buying iPhones and cloud computing and data storage devices.
In August, Tech Data blamed a global slowdown in IT spending for missing its quarterly sales target and predicted a softer sales market would continue.
"I think the business community — in Tampa and in Florida and in the United States — is back on its heels," Tech Data CEO Bob Dutkowsky said in an interview with the Tampa Bay Times. "It's in kind of a wait-and-see mode. That doesn't mean they are burying their heads in the sand … but I think there is a bit of hesitation in their step."
Dutkowsky ties a reluctance to spend directly to the bitter presidential election.
"There are a lot of unknowns in the business community right now," echoes Nancy Crews, who has become accustomed to gazing years down the road at shifting demand because of the cyclical industry she's in: military contracts.
Her company, Custom Manufacturing & Engineering, specializes in electronic and engineering design and manufacturing, particularly for the Department of Defense.
At its peak between 2010 and 2012, CME had roughly $17 million in annual revenues. It's currently under $10 million.
Businesses often go into a "holding pattern" during an election year, but Crews notices a spending angst that goes beyond D.C. politics. "Everyone is trying to figure out what's going to happen. I hear a lot of that amid my business friends — and not just in defense."
She has no crystal ball, she says, but "wouldn't be surprised" if a recession is looming.
To weather any storm, Crews has numerous defensive strategies. CME has diversified into other industries — namely automotive and industrial — and it is promoting a new product teaching about solar energy in elementary and middle schools.
Her company also is getting involved in international trade missions, seeing opportunities particularly ripe in Mexico if existing trade agreements hold up. The key, Crews said, is locking into long-term agreements — both because it takes a long time to develop new contracts and it helps to have commitments in the pipeline when the economy slows.
Not everyone is bracing for a slowdown.
Achilles Thomas, whose Brooksville business makes custom transmissions for cars and trucks, can barely keep up with international demand as orders come in from Scotland to Dubai.
His company, Monster Transmission & Performance, has moved three times since 2003 and is prepping to expand again from its 20,000-square-foot facility to a location five times as large down the street. "We're literally bursting at the seams," he says.
Thomas has heard some recessionary talk but doesn't buy it. Certainly not for his niche. "The car fanatics are always going to be car fanatics, even in hard times," he said. "They still find a way to make it happen."
Like Thomas, Eileen Rodriguez, regional director of the Small Business Development Center at USF, is optimistic the recovery will continue. But she's not betting on boom times. The best-case scenario when lending remains tight may be restrained growth.
"I think most of our small businesses — the ones we're engaged with — seem to be doing better than they have in the past five years, but it's been a slow process," Rodriguez said. "Finding financial resources is still a bit tough."
Are the country's top economists convinced this recovery still has legs?
The answer may come as soon as this month when the Federal Reserve makes its much-watched call about whether to finally start raising interest rates.
The predominant thinking on Wall Street based on the federal funds future: The combination of a still-fragile economy and lack of inflation pressure makes it unlikely the Fed will act.
But then again, not every bet in the market pays off.
Times staff writer Alli Knothe contributed to this report. Contact Jeff Harrington at [email protected] Follow @JeffMHarrington.