The economic recipe for the 2005 Florida economy: sweet with a dash of sour. Combine plenty of growing business confidence with just a few worries.
The confidence is well founded. After weathering 2004's nasty hurricanes and divisive elections, Florida still managed to lead the nation in new job growth. Recent Florida surveys on the outlook in 2005, including one by our sister publication Florida Trend and another by TEC International, indicate a streak of optimism not seen since before 2001 and the terrorism attacks.
Still, not all is full steam ahead in the Sunshine State. Two issues of special concern will influence the Tampa Bay area and state economy this year.
+ HURRICANE JITTERS: With the new hurricane season starting in June, tourism leaders are nervous that potential visitors who were mentally bludgeoned by weeks of CNN video showing four hurricanes smack the state will be wary of spending time here next summer. Tourists who make their final summer travel plans in the late spring will be reminded anew of Florida's 2004 devastation when the media fixates on the 2005 hurricane season.
Surveys late last year of about 1,900 vacationers and business meeting planners in New York, Washington, Atlanta and Chicago found that 20 percent of potential summer visitors said they would consider avoiding the state for fear of the storms.
"If only half _ 10 percent _ of those acted and did not come, it translates into a $2.7-billion hit in lost business for Florida's biggest industry, and $160-million in lost taxes for the state," warns Bud Nocera, president and chief executive of Visit Florida, the tourism marketing organization for Florida.
SOCIAL SECURITY OVERHAUL: President Bush may think he now has a mandate to restructure the Social Security system, but plenty of Florida seniors apparently have some doubts. Consumer confidence among Floridians declined during 2004, ending on the lowest level of the year in December, according to the Florida consumer confidence index run out of the University of Florida. Dig deeper and the sharpest drop in confidence was registered by Florida seniors when asked about their future finances. The December index for this group fell 19 points (a change of five or six points is typically significant; 19 points is like dropping off a cliff) from November's 86 points to 67 points.
Why is there such a sharp decline when Florida's economy is doing better than most states' economies? Probably because Florida seniors worry about possible changes to Social Security, suggests Chris McCarty, the survey director.
Just when you thought the political fundraising frenzy was over, Bush's political supporters again are soliciting millions of dollars for a new campaign to promote the president's private Social Security accounts. That means the issue will remain in the face of consumers throughout 2005 and could become the most expensive policy debate since the Clinton administration's health care plan was promoted, and failed, 12 years ago.
The AARP this month launched a multimillion-dollar pre-emptive attack on Bush's proposed personal retirement accounts that would invest a portion of Social Security funds in the stock market.
That's the general tone of Florida's business scene. Here are some specific business issues to watch this year:
BIOTECH BACKFIRE? Hard to believe, but it has been 15 long months since Gov. Jeb Bush unveiled a high-priced deal to bring California biotech heavyweight Scripps Research Institute to Palm Beach County. Sure, complex recruitments take time. But Scripps is still battling local Floridians over basic stuff, like an actual location for its research facility.
If Scripps can't nail down a site and start building soon, one unintended consequence will be the message to the corporate world that Florida is an unfriendly place to attract large-scale, high-end businesses.
Here's an extra twist. California, where Scripps is based, has a business reputation for red tape and high costs. Yet California recently shrugged off President Bush's federal guidelines that limit the research of stem cells. The state is committing large sums to stem cell research within its borders. And where is Scripps, a world leader in stem cell research, expanding? Into Florida, a state run by the president's brother. Figure that one out.
YOUNG ADULTS "R' US: Last year, the Greater Tampa Chamber of Commerce gave its blessing to Emerge Tampa, a new affiliate that seeks to recruit young business-oriented adults and empower them in the area's economic development process. The group blossomed to more than 500 members in less than a year and will be further testing its reach and muscle in 2005.
Former Tampa Chamber chief Deanne Roberts was a driving force behind the creation of Emerge Tampa. She views it as one of several new tools to help retain young, creative and educated adults in a metro area hardly known for nurturing up-and-coming talent.
Here's the fun part. Roberts has since moved on to chair a statewide group called Leadership Florida, where she wants to replicate Emerge Tampa across Florida. "It wasn't too hard to sell the idea," Roberts said. "Our own survey of college students a few years ago indicated a major brain drain trend." Of course, while Emerge Tampa grew rapidly on its own, a statewide network of such regional groups is a more complex, but clearly worthy, goal. Stay tuned.
EVER HIGHER COSTS: Watch your wallet, because 2005 will be a year of sharp price increases in energy, insurance and housing among other must-have things. This is the year when Progress Energy or Tampa Electric (and possibly both) will push for electricity rate hikes that finally break through the $100 barrier for 1,000 kilowatt hours. Just three years ago, Progress Energy charged less than $82 for the same amount of power. That's a 22 percent rate increase in a period when the annual inflation rate has remained less than 3 percent.
After hurricanes Charley, Frances, Ivan and Jeanne, property insurance companies are busy cranking up requests for still more rate increases. If the 2005 hurricane season includes direct hits in Florida, look for still higher rates, larger deductibles and some departures from the state by insurers drained by too many claims.
Don't forget Florida housing prices, which increased about 20 percent in 2004. That's great if you own a home but a major frustration if you're trying to buy one. Housing prices in the state might moderate a bit in 2005, but odds are Florida homes will appreciate again as long as mortgage rates stay low. The trick is that Florida wages are not budging much. Sooner or later, that means a healthy percentage of the state's population will find the price of a typical home beyond their comfortable reach. California has long experienced this unpleasant trend. But it would be a rude awakening in Florida, which historically prides itself on a lower cost of living.
GULF DRILLING REVISITED: How many more times will Florida have to repel attempts to drill for oil and gas in the nearby Gulf of Mexico? Plenty. Three U.S. senators (Pete Domenici, R-N.M., Mary Landrieu, D-La., and Lamar Alexander, R-Tenn.) are the latest trio to push for drilling closer to Florida. For now, the state enjoys the odd political benefit of a no-drill governor who is the brother of a politically sympathetic president. Come the end of 2006, when Gov. Jeb Bush's second term ends, it's a new ball game. If the Middle East oil supply is compromised, it's a new season.
That's just a quick sampling of crystal ball gazing at 2005. Wal-Mart's march across Florida will continue to squeeze once-powerful businesses from Winn-Dixie to Toys "R' Us to Kmart. North Carolina-based Wachovia's purchase of SouthTrust will renew takeover rumors of mid-sized banks in the Florida market. Come March 6, the Burdines name (now Burdines-Macy's, and soon to be simply Macy's) disappears, part of the greater extinction process of Florida's once-competitive industries.
Maybe that's part of Florida's business magic. This is a growth state ready, willing and able to change when the business wind blows. Watch for more economic gusts in 2005.
Robert Trigaux can be reached at (727) 893-8405 or trigauxsptimes.com.