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Wachovia economists: Florida has long way to go to pull out of recession

Already mired in the longest recession since the Great Depression, Floridians face a tougher road to recovery than the country as a whole, according to prognosticators with Wachovia.

Wachovia Economics Group, in a 21-page report Friday focused on Florida, said the state is on pace to post an aggregate loss of 720,000 jobs, including a net loss of 430,000 this year. It projects Florida's unemployment rate topping out at about 11 percent, "and would rise even further if not for the significant out-migration of prime working-age adults to neighboring states and Texas."

Florida entered the recession nine months ahead of the nation, and to emerge it has to overcome its biggest problem: the housing bust.

Permits of single-family homes have tumbled 90 percent from their peaks four years ago. The boom-to-bust numbers were particularly striking in the Tampa Bay area: Home prices soared 70 percent between 2002 and 2006 and have fallen 42 percent the past three years; home construction is off 90 percent from its peak three years ago.

The bay area's 10.4 percent unemployment rate is one of the highest in the state and significantly surpasses the highs reached in the past two recessions.

"Tampa's hard landing is somewhat surprising given the diversity of the local economy," Wachovia senior economist Mark Vitner and economic analyst Yasmine Kamaruddin wrote in the report.

The good news, they said, is the worst is likely past. The fourth quarter of 2008 and first quarter of 2009 marked "the darkest hours of this recession," and an improvement is likely to begin after this summer.

Nonetheless, that still makes this the longest and deepest economic downturn since the 1930s.

In 2008 alone, Floridians lost an estimated $1.2 trillion in household wealth, with about two-thirds of that occurring in financial assets, the report estimated. That doesn't include losses tied to the Bernard Madoff scam and other financial scandals, or other losses so far in 2009.

Hit hard by loss of employment, income and wealth, Florida's sales tax receipts fell 11.7 percent in March compared with a year earlier.

Looking ahead, Wachovia forecast a modest gain in spending later this year. But a turnaround in some of Florida's key industries is expected to lag. The economists predicted:

• A turnaround in tourism is more than a year away. In the Conference Board's latest consumer confidence survey, fewer households said they're planning a vacation within the United States during the next six months than at any other time since the survey began in 1978.

• The housing slump will remain a big drain on Florida manufacturing.

• Florida's citrus crop, which accounts for 70 percent of the country's citrus production, "appears to be headed for a somewhat decent year" after being buffeted by drought, freezes, disease and lower prices.

• With 12 major military installations and $27 billion in defense spending in 2005, Florida will benefit from an increase in defense-related spending. But the phaseout of the space shuttle program will eliminate about 4,000 direct jobs.

• International trade, a linchpin of Florida's economy, should gradually improve. But exports are likely to remain restrained throughout 2009 as global economic conditions remain weak.

Jeff Harrington can be reached at or (727) 893-8242.

Wachovia economists: Florida has long way to go to pull out of recession 06/12/09 [Last modified: Friday, June 12, 2009 9:00pm]
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