There's no question this is a summer of economic discontent.
Florida's double-digit unemployment is expected to creep higher again as part-time U.S. Census jobs dry up. Realtors and retailers alike anticipate a pull-back in spending from the first half of the year. And then there's the daily havoc on tourism, fishing and other industries wrought by the still-uncontrolled massive oil leak in the gulf.
But where are we exactly in terms of the economy?
Is it an extremely tepid and jerky recovery? A double-dip recession? Or, as economist Paul Krugman warned, possibly the early stages of the country's third big depression, following the Long Depression of the 1870s and Great Depression of the 1930s?
A trio of economists who closely track Florida took the less draconian view. They formed somewhat of a consensus that growth has slowed much more than expected, but the feared double dip — or worse — is still unlikely.
Here's how they see the rest of the year unfolding.
Senior economist, Wells Fargo
We believe the recession ended in Florida shortly after it did nationwide, which we deem was around the middle of last year. Nonfarm employment has risen during three of the past four months, producing a net gain of 78,000 jobs since bottoming in January. While part of the recent improvement is due to hiring for the decennial Census, hiring has picked up across a broad assortment of industries, including hard-hit sectors such as manufacturing and construction.
We've been expecting a second-half slowdown. We figured by July and August, everyone would be screaming about how the economy has already fallen into another double dip.
I think this is slower growth; I don't see a double dip. Too much of the downside risk has already been taken out. The financial system is able to raise capital again. Inventories are relatively lean.
I think by the end of this year, we'll see a legitimate recovery in housing take hold. We're seeing a modest improvement in employment.
What we're experiencing is withdrawal pains. It's like when you've quit smoking or quit drinking or any other addiction and are trying to go cold turkey. That's what this economy is trying to do — quit its addiction to stimulus. It's not a simple process, and it's not something that tends to go smoothly.
I am concerned that we're winding down the stimulus so suddenly. Look at aid to the states. That should gradually be reduced over three years.
Florida's numbers are lagging behind the nation's. As of May we were seeing some significant improvement in job growth but June and July numbers will come down. We've got a lot of people in Florida about to lose (unemployment) benefits and that's going to slow consumer spending.
In Florida, people will be concerned that the little bit of progress we made is being reversed. But because a good percentage of the job growth here was in Census hiring, it'll exaggerate the extent of the slowdown.
(Hiring) is still minuscule in may ways, but it's no different than what we've seen at the start of every recovery we've ever seen in Florida. It's like springtime in Chicago; it's still pretty cold. We're not going to replace the jobs we lost in this recession until the middle of the decade, if we're lucky.
Chief economist, Raymond James & Associates in St. Petersburg
The last two or three months we've seen expectations for growth coming down, but it's still positive.
It doesn't look to me like a double dip is likely, but it's certainly in the realm of possibility.
The risks seem to be more tilted to the downside. You still have a lot of residential and commercial real estate problems. You have state and local budgets under strain so you're seeing job cuts and some increases in taxes. You've got the fiscal stimulus that's going to be ramping down. You've got the Bush tax cuts expiring at the end of this year. Europe's (austerity) moves with their budgets have slowed the global recovery down somewhat.
But … we're much, much better off than we were a year ago in terms of the direction. We were losing 750,000 private sector jobs in the first quarter of last year. Now we're starting to see some job gains, even in Florida.
We thought all along this recovery really wasn't going to be rapid, and if it's slowing down a little more than anticipated, that means the recovery is going to take a lot longer.
The two biggest fears are a policy mistake where taxes are raised too soon … or the Fed starts to raise interest rates too soon. I don't think the Fed is going to make that mistake.
One of the biggest problems is you're not seeing much growth in small businesses. It's not just the (tighter) credit. A lot of these small firms don't want to borrow; their outlook is not too promising.
We also have the gulf oil spill taking a toll on consumer confidence. Negative psychology could be feeding on that at least for the near term.
The psychology is really hard to gauge. If enough people expect a double dip, it could be self-fulfilling. Consumer spending could go down. I don't think it would be quite as severe as the first leg down, but it's possible.
Director, Institute for Economic Competitiveness at the University of Central Florida
I'm still where I was in the middle of last summer … (when) I coined that this is a gravy-boat (shaped) case of recovery. This is not going to be a robust and V-shaped recovery.
What we're seeing is a deceleration back to that path. We got some eye-popping GDP (growth) numbers in the fourth quarter and it was a bit deceiving. It was really driven by inventories rather than a sustainable recovery.
I'm not ready to raise the double-dip flag at this point. It's just a deceleration into this more gradual recovery path. The labor market, while it's not improving dramatically, is no longer worsening. That … itself can boost the economy. (Consider) those folks who have remained employed but were still worried about their future employment. As that threat of job loss goes away, some of that pent-up demand to spend comes out. That combined with fiscal and monetary stimulus will keep things going forward, but at this very slow pace.
It will continue to take a long time for the housing market to recover, the stock market is going sideways at this time and the labor markets will be painfully slow to recover.
Historically, after a recession as deep as this one, there would be a pretty strong bounceback. But because of those factors … that is dampening that recovery. All of this is like a wet blanket on recovery.
I think what we're seeing is a more pronounced version of the jobless recovery (that) we saw in the wake of the 2001 recession. More pronounced and more protracted. The problem this time is not so much the slow climb, but the slow climb out of a much deeper hole.