Florida economy showing improvements
Florida’s economy continues to show slight improvements, according to the state.
The Florida Legislature Office of Economic and Demographic Research issued its “Florida: An Economic Overview” report last week.
The economic factors measured show better conditions since the recession, which began in December 2007 and ended June 2009, based on national statistics.
Florida economists say the state remained in recession longer than that. The report said Florida’s economic growth “turned positive” in 2010 after two years of decline.
“Florida growth rates are slowly returning to more typical levels,” said the report.
“But, drags are more persistent than past events and it will take several years to climb completely out of the hole left by the recession,” it said.
Income and earnings rise, but below national rates
• Florida’s per capital personal income grew 3.5 percent in 2011 over 2010, although it was No. 45 in the country and the growth was lower than the national average of 4.3 percent.
• Florida’s overall income growth of 4.7 percent ranked No. 29, below the national rate of 5.1 percent.
The report noted that earnings in Florida, Arizona, Michigan, Nevada and Oklahoma remained below their peaks in 2007 or 2008.
Employment and unemployment improving
• In February, Florida’s nonfarm job growth increased 1 percent, compared to the national growth rate of 1.5 percent.
• Florida gained 72,300 jobs over the year, but still was down 766,900 jobs from the employment peak.
• Florida’s unemployment rate was 9.4 percent, representing 869,000 people unemployed, in February, compared to the national rate of 8.3 percent. The highest monthly rate in the state was 11.4 percent in both January and February 2010.
• In February, five states had a higher unemployment rate than Florida.
• The highest February rate in Florida was 12.7 percent in Flagler County and the lowest was 5.4 percent in Monroe County. Of the state’s 67 counties, 17 had double-digit unemployment rates.
Population projections show growth in older age groups
• Florida’s population is projected to grow by almost 5.1 million people from 2010-30.
• The highest growth is projected in the 70-79 age group, at almost 25 percent, followed by the 60-69 age group, at almost 20 percent.
• The slowest growth is projected in the 50-59 age group, at just 1 percent or so. That is followed by the less than 5 percent growth in the 40-49 age group.
• The 80-and-over age group will increase by more than 10 percent.
• The 0-17 age group will grow by 15 percent; the 18-29 age group will grow 10 percent; and the 30-39 age group will increase by about 14 percent.
Housing improving, but still struggling
• Documentary stamp tax collections, from documents that transfer interest in Florida real property, rose year-over-year in 2010 and 2011.
• Documentary stamp tax collections in fiscal 2010-11 reached 28.5 percent of the 2005-06 peak and collections in the current fiscal year are on track to reach 29.5 percent of the peak.
• Existing home sales “are sputtering,” said the report. The 2011 sales level was 70.1 percent of the 2005 boom level and is at 79.3 percent of that level this year.
• Existing home prices are flat. The median sales prices for existing homes have been essentially flat for 37 months, “with a slight downward drift,” it said.
• The median sales price peaked at $257,800 in 2006 and was down 48 percent to $134,000 in February.
• “Foreclosure filings remain daunting,” according to the report. In February, the state had the second highest number of foreclosure filings in the country and the fifth highest foreclosure rate. For calendar year 2011, the state was No. 2 in filings and No. 6 in the rate of foreclosures.
• About half of all residential loans in the state are for homes that are underwater. The report showed that 8 percent of loans in Florida are delinquent, compared to 7.6 percent in the nation; 14 percent are in foreclosure, compared to 4 percent nationwide; and 22.1 percent are not current, compared to 11.7 percent of the nation.
• The mix of sales “points to lower prices.” Cash sales for homes have been growing as a percentage of all sales while financed sales have been declining. Short sales have been flat.
• The average price for real-estate owned properties is about 40 percent below the average price and the average short-sale price is about 21 percent lower.
• The percentage of REO and short sales among all sales in Florida fell from almost 60 percent in January 2011 to 49 percent in December.
• Cash sales rose from 26.7 percent of all sales in January to 35.4 percent at year-end.
• Financed sales rose from about 13.4 percent in January to 15.6 percent in December.
Credit conditions improving
The Federal Reserve Board surveys senior loan officers, asking about changes over the past three months in their banks’ credit standards for approving applications from individuals for prime residential mortgage loans.
Credit conditions have been improving, although they remain tight.
In January, 94.3 percent of loan officers said credit conditions remained basically unchanged, while 5.7 percent said they eased somewhat.
It was the first survey since July 2010, the earliest cited in the report, in which no senior loan officers said conditions have tightened.
Consumer sentiment on the rise
The University of Michigan Consumer Sentiment survey found that while perceptions had fallen in August to near the lowest level of the recession and not far from the lowest level ever posted, the subsequent months have shown improvement.
Consumer sentiment nationwide rose in March to 76.2 compared to the lowest point of 51.7 in May 1980.
Florida’s consumer confidence level of 74 is not far from the national trend.
Economy is slowly recovering
The national economy is in recovery and credit markets are recovering stability, but remain sluggish and difficult for consumers to access, said the report.
“The recovery has been roughly half as strong as the average gain of 9.8 percent over the same period during the past seven recoveries,” it said.
Florida’s housing recovery will be led by low home prices that attract buyers and clear inventory; demand caused by continued population growth and household formation; and the aging generation seeking retirement living.
Problems persist in the eurozone, however. The sovereign debt crisis led to banking instability that affected the global credit markets. The eurozone countries are in recession, the report said.
The eurozone conditions led to reduced exports, especially exports from Miami to Spain. Florida’s exports to Spain fell almost 30 percent last year.
Among other risks, automatic spending cuts by the federal government are scheduled to kick in at the start of 2013, affecting Florida businesses that receive federal contracts.
Also, gas prices continue to rise and are rising more in Florida than in the nation as a whole.
Florida’s highest recorded average price was $4.079 a gallon for regular unleaded on July 16, 2008. The report said the current average was $3.930.