Economic report shows signs of hope for Florida, but fundamental problems remain

Jun 7, 2012

The following article was published in The Florida Current on June 7, 2012:

Economic report shows signs of hope for Florida but fundamental problems remain

By Gray Rohrer

Florida’s economy grew last year, but at a slower pace than the previous year and slower than most states. The unemployment rate has dropped significantly, but not primarily because of job creation. Housing sales and prices are rebounding, but problems with foreclosures and underwater properties continue to be a drag on the real estate market.

The mixed bag of results is derived from a report released Wednesday by the state Office of Economic and Demographic Research.

Overall, Florida’s economy grew at a rate of 0.5 percent in 2011, slower than the 0.9 percent growth rate in 2010 and the 37th highest rate among states. Per capita personal income grew 3.5 percent, but that was the fifth-lowest rate among states. The national average increase in per capita personal income for last year was 4.3 percent. Florida is one of five states where earnings remain below pre-recession levels.

Gov. Rick Scott has touted the decline in the unemployment rate since he took office in January 2011, but the drop in recent months has been mostly because of workers leaving the workforce, not finding jobs. Florida’s unemployment rate for April is 8.7 percent. That’s down from 9.9 percent in December, but 75 percent of that decrease comes from a shrinking workforce rather than new employment.

Since December, the number of people in the workforce has shrunk by 48,000 to a total of 9,255,000 workers, even though the working age population has grown by 67,000 to a total of 15,384,000 people.

The report states that because the state will add 2,600 people of prime working age (25 to 54) every month, it will take many more new jobs than Scott’s pledge of 750,000 to reach pre-recession levels.

“It would take the creation of about 1 million jobs for the same percentage of the total population to be working as was the case at the peak,” the report states.

Scott’s office did not respond to calls and emails for comment by deadline Thursday.

A look at Florida’s housing market also reveals mixed signals. The number of home sales rose slightly last year, but document stamp tax collections are still below 2000 levels. The median sales price of an existing housing unit stands at $144,350, a 44 percent drop from the peak of $257,800 in 2006.

Rampant foreclosures are holding back the housing recovery – Florida had the sixth-highest rate of foreclosure filings in 2011 and the third-highest in April. The backlog of foreclosures in the court system means home sale prices will struggle to rebound. It takes an average of 806 days for a foreclosure to be processed through the courts. The current foreclosures in the system will take 20 months to clear.

As troubled as the housing market is, the report predicts that low home prices combined with Florida’s expected population growth will help drive the recovery, albeit after the inventory of distressed property is cleared.

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