Friday, September 21, 2018
Business

Trigaux: After so-so recovery from Great Recession, early signs of next downturn start to loom

Is Tampa Bay heading for another recession? Of course it is. It's coming.

Such is the Florida way of boom and bust.

The key questions: when and how bad? It's almost certain to arrive in the first term of our next president. Recessions historically strike disproportionately near elections.

And frankly, we're due. Though the next round should not be nearly as devastating as the last one of 2007-2009 — the worst since the Great Depression of 1929-1939.

As University of Central Florida economist Sean Snaith has quipped more than once this year: "We are closer to the next recession than the past one" — which now is far behind us in the rearview mirror.

So why bring up the dreaded R word? Florida's booming, right? Are we just gloom and doomers?

No way. Recessions happen. The last one hit Florida during the euphoria of a housing bubble when too many Floridians seemed convinced that fast appreciating homes flipped with borrowed money was a sure ticket to easy wealth. Then the market collapsed.

It's time to look ahead. Tampa Bay Times business reporters reached out in recent weeks, asking home builders, developers, corporate CEOs, economists, retailers, tourism marketers, restaurant operators, real estate experts and homeowners:

Is a recession looming on the near horizon in your slice of the economy?

Answers varied widely and wildly. They range from a resounding No from bullish tourism promoters unfazed by Zika threats and Brexit decoupling to Very likely from restaurant analysts and owners who fear a coming shakeout.

Sorry, tourism folks. Greater Zika troubles lie ahead for Florida's economy, even if they are not yet on your official radar.

Economist Snaith sees it. In Miami, where Zika has already taken hold, he points to declines in hotel bookings and air travel. Business owners in affected areas report steep losses. And polls show many visitors would rather stay away. Zika, Snaith warns, is a major threat to Florida's economy.

More than ever, the course of the economy may depend on the Nov. 8 outcome of the tumultuous presidential election. Hillary Clinton is pushing a major infrastructure spending plan and an income tax restructuring that, on paper, would hit the nation's wealthy. Donald Trump wants to slash corporate taxes but also boost military and infrastructure spending.

Both plans, experts say, would likely swell the federal deficit significantly. Beyond that, opinions from economic experts range all over the place, especially for the lesser known Trump and his maverick approach for the economy.

The glut of wild cards in this election cycle has economists struggling to make forecasts on such unfamiliar turf. Still, this much is telling: Not one former member of the White House Council of Economic Advisers has come forward in support of Trump's campaign.

On the flip side, Clinton's plan sounds more mainstream. But recent GDP growth remains abysmally low (close to 1 percent), so that's not much of a foundation for growth, either.

It would be so much more simple to forget politics and just look at economic trends. Not this time.

"Have you ever seen the movie Alien vs. Predator?"

That's what Jason Schenker, president of market research firm Prestige Economics, asks readers at the start of his just published book: Electing Recession: The Impact of Presidential Elections on Financial Markets and the Economy.

While no big fan of the sci-fi movie, Schenker likes the film's tag line — "Whoever wins ... we lose" — because it reflects the dour impact of this election.

"Don't get me wrong, there are plenty of reasons to prefer one presidential candidate over the other," Schenker writes. "But there are a number of reasons, unfortunately, it may not matter for the economy.

"In the near term," says Schenker, "the risk of a U.S. recession is high."

The Great Recession officially came to an end in June 2009, though few folks woke up the next month with big smiles and fat wallets. Today, the country is still growing, though at a snail's pace, and the griping over a lousy economy hasn't gone away. The unemployment rate has declined, a lot, but for now seems to have bottomed out just under 5 percent.

But we're interested in what lies ahead. Here are some clues.

Last month, the U.S. economy expanded at a puny annualized rate of 1.1 percent, just below the predicted estimate of 1.2 percent. The U.S. economy is "stuck in neutral" — extending a lackluster outlook that CEOs have been reporting for the past year. So says a Business Roundtable survey of chief executive officers released this past Monday.

Separately, the National Association for Business Economics this past week trimmed its already weak forecast for the rest of this year. The business economists expect the U.S. economy to avoid a recession for at least the next two years, but just barely.

So, best guess: look out for a recession come 2019. That's smack in the middle of the next president's first term.

An awful lot will happen before then. But a recession? It's coming.

Contact Robert Trigaux at [email protected] Follow @venturetampabay.

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