Wells Fargo: Florida economy to grow slowly, but still outperform national average

Florida's economy is on track to grow faster than the rest of the country through next year, its population is rebounding and the state will add a combined 64,000 jobs next year on top of 40,000 jobs this year.

But even if those predictions from Wells Fargo economists hold true, don't hold your breath for Florida to climb back to its pre-Great Recession heyday anytime soon.

Wells Fargo economist Mark Vitner said he's increasingly confident we've escaped a double-dip recession this year, but he's likewise confident we've entered a post-Cold War era of "incredibly sluggish" economic recoveries.

"There's a good chance you don't recover (before) you go into the next recession … even if it's five or six years down the road," Vitner said in a conference call Monday discussing the bank's latest Florida forecast.

Economists define a recession as two consecutive quarters of negative growth. The country technically exited the recession in mid 2009 but slow growth since then hasn't been enough to cut into high unemployment.

The good news for Florida, Vitner said, is its recovery has broadened. Beyond the leisure/hospitality and health industries, the state is now adding jobs in retail, trade, and professional and business services. Over the past year, Tampa Bay has morphed from one of the biggest laggards among Florida metros to one of the state's biggest job generators.

The bad news, not surprisingly, is the still-troubled housing market.

Vitner forecast that home prices would fall another 5 percent to 8 percent in the Tampa Bay area before hitting bottom next year. "Home prices may retest their previous lows in Florida" from last December, he said.

At the same time that foreclosures continue to push down prices, the flow of foreign investors looking for housing bargains has dwindled. Europe's woes have curtailed the number of European house hunters while a weakened Canadian dollar means we're seeing fewer Canadian buyers. Even the pipeline of Latin America investors, particularly from Brazil, is slowing down.

Among other predictions:

• Florida's economy will grow by 2 percent this year and 2.2 percent in 2012, compared to about 1.5 percent average growth nationally. "The key reason for Florida outperforming (the country) is we fell harder so we have more room to recover," he said.

• Personal income will finally pick up, growing a projected 4.2 percent this year and 4.3 percent next year.

• Florida will gain a net 110,000 new residents this year and 130,000 next year.

• Home building won't reach a more normalized pace of adding 1.2 million new homes a year statewide until 2015.

Jeff Harrington can be reached at (727) 893-8242 or harrington@sptimes.com.

Wells Fargo: Florida economy to grow slowly, but still outperform national average 10/10/11 [Last modified: Monday, October 10, 2011 5:21pm]

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