by Karen Brune Mathis
Managing Editor
It’s expected to take years for Florida’s economy to recover from the recession.
In employment alone, the state would need to create about 1 million jobs for the same percentage of the population to be working as at the peak of employment.
That’s according to the Florida Legislature Office of Economic and Demographic Research.
Still, in an economic overview it released recently, the office included a page headlined: “Economy Slowly Recovering.”
“Florida growth rates are slowly returning to more typical levels,” said the office, “but drags are more persistent than past events, and it will take years to climb completely out of the hole left by the recession.”
The report said the national economy is in recovery and that the financial markets are regaining some stability, yet they remain sluggish and difficult for borrowers to access.
According to the report, the Florida economy turned positive in 2010, posting economic growth after two years of decline. The state’s gross domestic product ranked No. 40 in the nation with a gain of 1.4 percent, according to the office.
Florida also posted gains last year in personal income. Its 1.6 percent increase in the first quarter of 2011 ranked it No. 38 in the country. The nation’s overall gain was 1.8 percent.
As for jobs, May was the eighth consecutive month showing year-over-year job growth after losing jobs for three years.
Florida posted a 10.6 percent unemployment rate in May, compared to the nation’s 9.1 percent rate but down from the state’s highest monthly rate of 12 percent in December.
In May, 32 of the state’s 67 counties had double-digit unemployment, including Duval at 10.3 percent.
“The job market will take a long time to recover — about 832,900 jobs have been lost since the most recent peak,” said the report. “Rehiring, while necessary, will not be enough.”
Not only that, but the report said that the state’s prime working-age population of 25-54 is projected to add 1,700 people a month, meaning even more jobs would be needed in order to re-employ those who lost jobs and to create jobs for the new workers.
“So the hole is deeper than it looks,” said the report, explaining the state needs 1 million jobs to restore the employment level to its peak.
While consumer perceptions are improving, it’s important to look at where it was.
“Consumer sentiment can be a leading indicator of recession,” said the office. “Nationally, it is improving from near the lowest levels ever obtained.”
Florida’s consumer confidence was 68 in April, following the national trend “but seems to have more volatility.”
The office summarized results in several areas.
Population
“Population growth is the state’s primary engine of economic growth, fueling both employment and income growth,” it said.
The office forecasts relatively flat population growth in the short term, averaging 0.7 percent from 2010-12.
However, growth should recover to an average of 1.1 percent from 2025-30, with almost 90 percent of that from net migration, meaning people moving into the state.
That’s still less than half of the annual growth rate of more than 3 percent from 1970-95, it said.
At any rate, Florida is on track to break the 20 million population mark by the end of 2015, which would make it the third most populous state, surpassing New York.
The state is aging:
• From 2009-30, the state’s population is forecast to grow by almost 5.1 million people. Almost two-thirds of the gain, or 64.4 percent, will be people age 60 or older.
• The share of population of people age 65 and older will grow to 26 percent by 2030, up from 17.3 percent last year.
• The share of the population considered working-age, 25-54, will fall from almost 40 percent of the population last year to 34.1 percent in 2030.
The state is diversifying:
• Hispanics represented 22.5 percent of the state’s population in 2010 and will represent more than 26 percent in 2030.
• Florida’s minority percentage of the population is 42.1 percent, compared to the nation at 36.3 percent.
Housing
Florida’s housing is generally improving, said the office.
“Sales volume and building permits are both back in positive territory,” he said, showing year-over-year growth from 2009 to 2010.
Still, building permits from January-April were 20.5 percent below the rate in January-April 2010.
Existing home sales “are sputtering,” it said, reporting that the 2010 sales level was just 70.1 percent of the boom level of 2005. Median sales prices have been flat since February 2009, “with a slight downward drift.”
The office said Florida’s home ownership rate has fallen from 72.4 percent in the middle of the decade to 69.3 percent in 2010.
However, “foreclosure filings remain daunting,” it said.
Foreclosures:
• In 2010, for the second consecutive year, Florida had the second highest number of filings, at 485,286 properties, and the third highest foreclosure rate, with 5.51 percent of housing units receiving at least one filing during the year.
• In May of this year, the state was No. 2 in the country for the number of filings and No. 7 for the rate of foreclosure, it said.
• Foreclosures were adding more houses to the inventory than the number of sales, it said.
According to the office, a Florida turnaround in housing will be led by:
• Low home prices that attract buyers and clear inventory.
• Long-run sustainable de-mand caused by continued population growth and additional households.
• The aging of the baby boom generation and other demographics.
Banking and lending
Since January 2009, the office reports that 49 Florida banks have failed, with 14 of those during 2009, followed by 29 last year and six so far this year.
Meanwhile, credit conditions appear to have tightened slightly.
The office cited a Federal Reserve Board April “senior loan officer opinion survey on bank lending practices.”
Asked how credit standards for approving applications for prime residential mortgage loans have changed over the prior three months, 92.5 percent said the standards were unchanged while almost 4 percent said they had tightened somewhat. Another 2 percent said they had eased somewhat.
The office also included what it called a known threat — the continuing impacts from the Deepwater Horizon oil spill impacts.
It also listed what it considers “Black Swans,” or “low probability, high impact events.”
Those were:
• Significant commercial real estate defaults that lead to a round of small and mid-size bank failures.
• Severe natural disasters, such as hurricanes.
• Gas prices that surge and remain elevated for an extended period.
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