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Economists say Florida's recovery will be delayed

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— Florida's economic slump is worse than state economists had predicted earlier this year, and now they say it'll last about six months longer than previously expected.

Their February outlook had been for recovery to start about a year from now, but a new update says things probably won't begin turning around until the end of 2009.

"It's a bit more bleak than it was originally," legislative economist Amy Baker said Thursday. "Things are very weak in the next year, but then we do start to see recovery and we do get back to normal growth rates."

Florida's downturn began in 2007 due to the end of an extended housing boom, which had been heightened by the replacement and repair of homes damaged by hurricanes in 2004-05, according to the report issued Wednesday by the Florida Economic Estimating Conference.

The slump is going to last longer because the national economy now also is in decline, burdened by high fuel and food costs and distressed housing and credit markets, said Baker, coordinator of the Legislature's Office of Economic and Demographic Research.

"Until that clears, it's going to have spillover effects both on individuals looking to go buy a house and get a mortgage but also on homebuilders and other construction folks," Baker said.

The report notes Florida lost 74,700 jobs — 54 percent directly related to the construction downturn — over a 12-month period ending in May. That's more than any other state, but Baker said anything that happens in Florida is going to be big because it's the fourth-largest state.

Florida's May unemployment rate of 5.5 percent was the state's highest since January 2003 but the same as the national rate. The report predicts Florida's rate will get worse, hitting a high of 6.03 percent in the fiscal year beginning July 1, 2009.

She said the state's slump has been so deep and long because it follows a housing boom of historic proportions that created many of the jobs now being lost.

"A lot of the job losses that you see are in the nature of being a correction, a very painful correction, but a correction," Baker said.

Florida has been through boom and bust cycles before, but few booms have lasted as long — five years — or seen such big increases in housing starts, prices and sales, Baker said. Also, the most recent boom was statewide while others had been regional.

"We've never experienced that before," she said.

Florida property tax cuts and the national stimulus program that sent rebates of $300 to $1,200 to millions of Americans have been of little help, Baker said.

Those dollars are being eaten up by gasoline and food price increases or used to pay off old bills instead of being spent on new goods and services, she said.

"We're kind of fighting against forces that are bigger than the state," Baker said.

Growth is a major economic driver for the state, but the national housing slump and credit crunch have prevented people from moving to or doing business in Florida.

Population is continuing to grow, just not as fast. Florida is still on track to break the 20 million mark in 2013 and before then surpass New York as the nation's third-largest state.

Growth since the mid-1990s had ranged from 2 percent to 2.6 percent annually but it's expected to be about half as much over the next four years.

The economists will apply the revised outlook when they develop a state revenue estimate this fall that'll be used to write Florida's next budget.

The state has cut spending by about $5 billion over the past year because of falling revenue. The new outlook is a signal more declines and budget cuts may be in store, Baker said.

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No surprise here! Just look around at all the empty and closing businesses...

#1 Posted by Midwesterner on July 17, 2008 at 1:30 p.m. (Suggest removal)

you might want to correct the title of the article "than" instead of "that"

#2 Posted by coral on July 17, 2008 at 1:49 p.m. (Suggest removal)

Economists and researchers have also acknowledged that Southwest Florida's economy has been hurt worse than the rest of the State. Like many of us have stated before on here...it's going to get worse before it gets better.

#3 Posted by swfljim on July 17, 2008 at 2:05 p.m. (Suggest removal)

How do these economists come up with a "recovery" in six months?

Does something magically happen in six months to all the foreclosed homes and lower property values?

My dog can make better predictions.

#4 Posted by Sanity on July 17, 2008 at 2:29 p.m. (Suggest removal)

Who writes these articles? Looks like more doom & gloom.....

#5 Posted by theabyss on July 17, 2008 at 2:31 p.m. (Suggest removal)

Sanity...you pose an excellent question.

Truth is....it's an estimation, based on formulas and past economic forecasts, placed into a computer program that spits out most of the answers accurately for the most part.

Trouble is Arthur Anderson used to develop this exact economic software, and this company is a prime example of forging the books for profit.

So these forecasters are still going to make estimates, but they aren't on the mark half the time, and we all suffer from the consequences of poor economic predictions.

The job forecast is really tough for the younger generations looking for work here. They are fleeing Florida, and looking for work in other states.

It's very sad.

#6 Posted by beetlejuice on July 17, 2008 at 2:36 p.m. (Suggest removal)

The economic news in Florida is not all bad. Donald Trump just sold his Palm Beach mansion for 100M and set a real estate record.

#7 Posted by reasonableguy on July 17, 2008 at 2:59 p.m. (Suggest removal)

WOW....I feel so much better about Donald's real estate transactions reasonableguy.....

reasonableguy....

YOU'RE FIRED!

You're not alone though....there's 74,700 people out of work along with ya.

It is very sad.

#8 Posted by beetlejuice on July 17, 2008 at 3:13 p.m. (Suggest removal)

This can't be true. NABOR just released numbers saying things are looking up for the 5th straight month.

#9 Posted by foreclosure_agent on July 17, 2008 at 3:20 p.m. (Suggest removal)

Bush wants you to stay the course...Just another 6 months and things will start to look up again.
"WAR" always does this to America.
Try not to forget that in the future...
I always read the sales in Naples and things are not looking up...I see a lot of time shares happening in Marco, and Ave Maria (Divosta) sales, but that is under $300K usually.
Nothing to speak of for the many Real estate people trying to survive in Collier County.

#10 Posted by pippin on July 17, 2008 at 4:26 p.m. (Suggest removal)

As long as fuel prices are high, the economy will suffer. So since we won't drill, we should see some improvement in maybe 30 years.

#11 Posted by thinker on July 17, 2008 at 4:53 p.m. (Suggest removal)

It's not so 'til Hank Fishkind says it's so.

#12 Posted by almasonlybar on July 17, 2008 at 9:04 p.m. (Suggest removal)

pippin...as an economics teacher explained to me once....which I'm still tryin to figure out...whatever the heck he was tryin to get through my thick head.

"Naples is an economic Utopia...seasonal in economy, but with enough outside money to sustain the course of sustainable jobs."

So what I think he meant was waiters and waitresses would make it, and maybe the grocery clerks, but every other economic sector would be in the trash.

Real estate....is not a utopia Mr. Economy Geek.

What goes up...must come down.

No matter where you live in the U.S.

#13 Posted by beetlejuice on July 17, 2008 at 11:24 p.m. (Suggest removal)



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