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Economic fallout from BP oil spill will haunt Florida for years, reports say

A pair of reports Wednesday — a long-term economic forecast from the University of Central Florida and a University of Florida survey — stoke concerns that the economic fallout from the BP oil spill will haunt the state for years.

"BP may have successfully capped the wellhead at the bottom of the Gulf of Mexico, but not before the oil spill put a cap on Florida's economic recovery," UCF economist Sean Snaith said in releasing a statewide forecast.

It predicts the leisure and hospitality sectors won't start growing again until 2012, lagging even an improvement in construction.

Meanwhile, UF researchers said the spill is threatening to hurt the state's precarious real estate industry, which had been in the midst of bottoming out.

"The devastating effect of the spill on the Panhandle's economy has created a giant cloud of uncertainty that is affecting all markets across the state," said Timothy Becker, director of the university's Bergstrom Center for Real Estate Studies.

In a quarterly survey, UF researchers said the effect of the oil spill already is statewide, even though oil has showed up only on beaches in the Panhandle. They said the disaster's effects are a primary worry in real estate, second only to poor job growth.

Florida's unemployment rate has fallen slightly in recent months but still remains at a troubling level of 11.4 percent, the fifth-highest jobless rate in the country.

Becker cited two main changes since the last real estate survey: Investment in industrial properties has grown more optimistic, while investment in apartments has grown more pessimistic.

The outlook for single-family housing development and sales both declined in the quarter. "Our respondents remain negative about new home construction, although builders are continuing to buy finished lots on which to build on," he said.

Becker said the residential and commercial outlook was brightest in South Florida, relatively speaking, because of international diversification, a vibrant culture and a continued inflow of investors.

Looking ahead, he said, a large wave of commercial mortgages coming due — nearly a trillion dollars in real estate loans — will need to be refinanced "and there is just not the money to do that."

Snaith, the UCF economist, raised similar concerns about long-term growth in his report, a 30-year forecast examining Florida as a whole as well as 12 metro regions. Among other predictions:

• Unemployment will not fall below 10 percent until the second quarter of 2012, and it could be 2022 before it drops below 5 percent.

• 2010 will be another tough year for the housing market, but the expiration of the first-time home buyer tax credit will make it appear worse than it is.

• Housing starts will rise even more slowly than was expected over the next several years, reaching 2001 levels by 2013.

• After dropping in 2009, real personal income statewide will grow 2.8 percent this year and average 3.5 percent annually from 2011 to 2013.

Tourism up, except in spill area, Fed says

Tourism in the Southeast is on the upswing from last year, with the notable exception of areas affected by the oil spill. That's the assessment of the Federal Reserve in its latest anecdotal "beige book" survey released Wednesday. The Federal Reserve's Atlanta-based Sixth District, which includes Florida, found the pace of economic activity "slowed somewhat" in June and July. Retailers reported a slight increase in traffic but their outlook was less optimistic. The pace of new and existing home sales had slowed, and their outlook was pessimistic. Manufacturers saw "a slight deceleration" in activity. And bank loan demand was subdued amid continued tight credit conditions. Meanwhile, business-related travel and convention bookings were improved, based on feedback from Miami and New Orleans. Leisure travel was positive in most district destinations, the Fed reported, "except for the Gulf Coast where significant concerns were reported over the oil spill and its impact on tourism."

Economic fallout from BP oil spill will haunt Florida for years, reports say 07/28/10 [Last modified: Wednesday, July 28, 2010 7:07pm]
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