Miami Herald: Florida’s economic recovery lags behind rest of U.S., Fed says
Sep 10, 2009
This article was published by the Miami Herald on September 10, 2009
Miami Herald Staff and Wire Reports
Economic activity is stabilizing or improving in most of the United States, according to a new government survey, adding to evidence that the worst recession since the 1930s is over.
The Federal Reserve’s snapshot of economic conditions backs predictions by Fed Chairman Ben Bernanke and most other analysts that the economy has started to grow again in the current quarter.
The Atlanta Fed, which covers Florida, reported that most businesses in the region saw “signs of stabilization.” Two bright spots were auto sales, which saw a spike thanks to the popular cash-for-clunkers program, and manufacturing, which reported new orders and increased production levels. Retailers and tourism operators reported that spending was “little-changed.”
“The recession is moderating in Florida. That’s undeniable,” said Chris Lafakis, an economist with MoodysEconomy.com.
But the continued housing crisis and worries that state population growth may have stalled — or even shrunk, as the University of Florida believes — could make the state a national laggard in an eventual rebound, he said.
“It will be very difficult for the economy to meaningfully recover and expand . . . in the absence of a stabilization in house prices,” Lafakis said.
While sales of existing homes were up year-over-year, prices were down as unsold inventory continued to weigh on the market, the report found.
In addition, commercial real estate sales slowed, vacancy rates increased and developers reported fewer projects in the pipeline.
While unemployment in Florida — already at a record-high 11 percent — is expected to keep climbing, the Fed survey found that staffing firms in the region did report a “slight pickup” in demand for temporary workers.
That’s an encouraging sign because employers will usually boost use of temp workers before they hire new employees.
The Miami branch of the Atlanta Fed was not immediately available for additional comment.
In the survey released Wednesday, all but one of the Fed’s 12 regions indicated that economic activity was “stable,” showed “signs of stabilization” or had “firmed.” The one exception was the St. Louis region, which continued to report that the pace of decline in economic activity appeared to be “moderating.”
Looking ahead, businesses in most Fed regions said they were “cautiously positive” about the economic outlook.
The assessments of businesses on the front lines of the economy were brighter than those they provided for the Fed report in late July. At that time, most regions said the recession was easing its grip, and some of them reported signs that activity was leveling off.
Analysts predict that the economy is growing in the current July-September quarter at anywhere between 3 and 4 percent.
Most of that growth should come from more spending from businesses, which had slashed investments — often by double digits — during the recession.
Consumer spending, however, is expected to turn up only because of the binge-buying of automobiles generated by the short-lived cash-for-clunkers program. Buyers were given cash rebates to trade in less efficient gas guzzlers.