UCF economist: Expect a long pull out of 'economic ennui'

Published Oct. 16, 2012

University of Central Florida economist Sean Snaith won't wager whom he expects to win the presidential election.

But he's willing to bet that regardless of the outcome, there won't be a sudden surge in hiring and consumer spending.

"President Obama would keep us on the same policy path we have followed during the past four years and hope that the economy will change, while Gov. Romney would change the president's key policies on health care and financial regulation with the hope it would end our economic ennui," Snaith said in a quarterly U.S. economic forecast released today.

His crystal ball: Expect little movement in many parts of the economy throughout 2013-14 and don't look for the nation's employment rate (currently 7.8 percent) to dip below 7 percent until 2015. Plus, he notes, the probability the country will fall back into recession next year has increased over the last quarter to nearly 20 percent of forecasters surveyed by the Federal Reserve Bank of Philadelphia.

Among other predictions:

• The economy will only grow by only 1.7 percent this fourth quarter and just 1.9 percent in 2013, far shy of the 3 percent-plus level desired for economic recovery. After that, the picture brightens some with growth of 2.7 percent in 2014 and 3.2 percent in 2015.

• Ravaged by the huge drop in housing prices and lost wealth in the labor market, consumers are ill-suited to lead the economy to faster growth.

• The federal government will spend much of its time walking the fine line between the necessity of spending cuts because of the deficit and fear of harming "this flailing recovery" by cutting too much.

• State and local government spending will continue to decline next year before turning positive in 2014.

• Housing will continue its rebound. Over a four-year span, housing starts will more than double from 761,199 in 2012 to 1,573,995 in 2015.

Snaith's analysis comes on the heels of an economic forecast by the real estate services firm Jones Lang LaSalle, which predicts it will take until 2019 for Florida's job market to recover to its prerecession level.

Florida currently has about 7.3 million people working, down about 740,000 jobs from its peak in late 2006. Jones Lang LaSalle forecasts job growth will increase about 1.6 percent a year, bringing the state past the 8 million mark again seven years from now.

However, that job growth won't be enough to bring Florida back to its prerecession level of remarkably low 3.3 percent unemployment because of a rising population. The state's population is expected to grow an average of 1.5 percent annually over the next five years.