Trigaux: 2016 economic upheavals already fraying Floridians' economic nerves

Published Jan. 8, 2016

The bright, shiny new year for the recovering economy grew quickly tarnished this past week with the Dow and S&P stock markets delivering their worst start to a new year. Ever.

On 2016's first trading day last Monday, the Dow opened at 17,405 then fell dramatically, losing nearly 1,000 points or close to 6 percent, by Friday afternoon. China woes are mostly to blame. But the week was rife with news of hydrogen bomb claims from North Korea and escalating tensions between Saudi Arabia and Iran. Still-falling oil prices are translating into area gas prices now pushing below $1.90 a gallon, but the trend is also hurting the worldwide energy industry stuck with excess supply and not enough buyers. Corporate earnings for the fourth quarter and all of 2015 will become public in the coming days with analysts worried over thinning profits.

And, judging by the primary warm-ups, this may be a long and brutal U.S. presidential election year stoked by campaigns promising very different directions for the country.

It all combines to compound our feelings of uncertainty.

Oh yes — here's one more thing to get you twitching. Economist Sean Snaith, who tracks Florida closely as director of the University of Central Florida's Institute for Economic Competitiveness, spoke to a business group this past week on Clearwater Beach about the tepid comeback by the economy in the years since the nasty recession. And he reminded his audience:

"We are closer to the next recession than the past one."

Such is the global-meets-local state of affairs as Floridians find themselves wondering:

Where do we stand as 2016 unfolds?

The answer, of course, varies by individual and household. In Florida and the Tampa Bay area, the basic signs are improving and should bolster confidence that economic conditions here will remain positive — if not robust.

On Friday, the U.S. Labor Department reported nonfarm payrolls increased by 292,000 nationwide last month. That's a strong number.

Florida's unemployment rate now stands at 5 percent, the same as the country's. Tampa Bay's rate is even lower at 4.6 percent. Home prices are rebounding at a faster clip than most other metro areas, even as housing values remain well below the 2006 peak before the bubble burst.

The number of Tampa Bay area job openings increased nearly 1 percent in December with 55,965 listings, says jobs search engine Simply Hired.

Who's hiring? The top five companies, in order of their sheer number of openings, range from health care giants HCA, BayCare Health System and Community Health Systems (which owns Bayfront Health in St. Petersburg, among other area hospitals), to financial giant Citi (busy beefing up an anti-money laundering effort based in Tampa) and Bradenton-based retailing chain Beall's.

These are all good signs, and opportunities for folks who have the right training and experience to qualify for such an abundance of job openings.

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On the flip side, an ongoing contributor to stress over the economy is that too many households still operate too close to the financial edge, say multiple reports.

A November report from Pew Charitable Trusts found that one in three American families have no savings at all.

A new survey from reports that only 37 percent of Americans have enough savings to pay for a $500 or $1,000 emergency. The other 63 percent would have to resort to measures like cutting back spending in other areas (23 percent), charging to a credit card (15 percent) or borrowing funds from friends and family (15 percent) to meet the cost of the unexpected event.

This cross-your-fingers lifestyle is hardly new. But shouldn't it be easing after years of even modest economic gains?

It isn't. Low and stagnant wages are a big factor. Tampa Bay annual wages (averaging less than $44,000) trail Florida's average (just under $45,000), which are badly behind the national wage average (more than $50,000), which in turn is less than the average wage of U.S. metro areas (just under $52,000).

Another piece of the stress load is too many people — especially younger adults — do not manage their money well, or simply lack the financial skills to do so.

Yet another study released this past week said that more than 40 percent of millennials (adults 35 and younger) used a payday loan, pawnshop, tax refund advance or other alternative financial product in the past five years — money services that tend to be expensive options aimed at lower-income households. The survey of 5,000 millennials was done by Pricewaterhouse­Coopers and the Global Financial Literacy Excellence Center at George Washington University.

The survey findings show most of those polled are "dissatisfied" financially with where they are.

Of particular concern, PwC corporate responsibility leader Shannon Schuyler told the Wall Street Journal, "only 36 percent have put money into their 401(k)s" — tax-advantaged accounts designed to save for retirement — "and about 20 percent have taken money out in the past year," using a retirement tool instead as a savings account. She also pointed to about 30 percent of those surveyed reporting checking accounts that are overdrawn.

"They are searching for dollars," Schuyler said. And more than half are pressured by the size of their student debt. The survey captures how worried they are but also how unwilling they are to ask for help.

So feel free to blame China's careening economy for feeding the early market angst of 2016. But let's just be clear — the financial volatility that may lie ahead will stem from many sources. Once-booming Brazil is in a tailspin. The Canadian looney is weak. And more U.S. households need to get a tighter grip on their wallets, at least enough to handle an unexpected $500 emergency.

"A recession is not imminent," economist Snaith reassured his local business audience a few days ago. "But the probability has gone up."

Contact Robert Trigaux at Follow @venturetampabay.