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Analysts Offer Gloomy 1-Year Outlook For Florida Economy

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By CATHERINE DOLINSKI

The Tampa Tribune

Published: July 17, 2008

TALLAHASSEE - Gov. Charlie Crist said the property tax breaks that voters adopted in January would "fire up" the state's economic engine.

President Bush said those economic stimulus checks cut by the federal government this spring would "help us pull out of this economic slowdown."

But with unemployment rising and incomes falling more this year than previously expected, Florida's slowdown is here to stay for another full year, the state's top analysts reported Wednesday in their gloomiest report yet on the state's economy.

"This time next year, we wouldn't expect to be a whole lot better than we are right now," said Amy Baker, coordinator of the Office of Economic & Demographic Research, who headed the economic estimating conference. "The question is, does it continue on beyond that, or does it start improving?"

That's the only real good news, she said. "Things are going to uptick a year from now."

The analysts had predicted earlier this year that Florida's economic growth would not reach normal levels until fiscal year 2009-2010. On Wednesday, they predicted normal growth would not return before the latter half of that fiscal year. Among their findings:

•Consumers will spend less this fiscal year as per-capita income, adjusted for inflation, declines by 2.7 percent. Expect normal income growth, around 3.3 percent, to return by 2011-2012.

•Florida reported 74,700 jobs lost in May 2008 during the previous year, and employment is expected to further decline by 0.1 percent this year before rising 1.5 percent in 2009-2010.

•Private housing construction drops by 24.4 percent this year and never returns to 2005-2006 levels during the forecast period.

"Further straining Florida households and businesses, gas prices have now hovered around $140 a barrel for the last several months, food prices have risen, and the credit crisis has spread well beyond the subprime market," the analysts wrote.

Their findings arrived the same day that pollsters for National Public Radio, the Kaiser Family Foundation and Harvard School of Public Health reported that the economy is among the top two issues in the presidential election for seven out of 10 Florida voters.

Government leaders have been unable so far to fix what ails the economy. Randall Holcombe, a professor of economics at Florida State University isn't surprised. "People give the government more credit or blame for more control over short-term economic conditions than it really has."

Outgoing House Speaker Marco Rubio says it didn't have to be that way. Rubio called last fall's special session that produced Amendment One "a missed opportunity to do something dramatic to stimulate the economy ... Nothing happened that put Florida in a better position today."

But Cynthia Shelton, president-elect of the Florida Association of Realtors, said allowing people to transfer their assessment cap to another property - the "portability" aspect of Amendment One - appears to be helping somewhat to slow the decline in existing home sales. She expects more effect over time.

EDR's Baker said the home sales slowdown is indeed slowing, from double-digit percentage drops for three years to a decline of 5.5 percent in May from the prior year. She added that the data on Florida's foreclosure rate, while "still ugly," has improved.

"They're not signs of recovery," she said. "But they're signs that things are stabilizing - and that's good."

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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