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Tallahassee, FL – Florida's economic climate is improving, but the recovery will be slower than expected. That's the conclusion of economists, who also see plenty of jobs returning to the state. Gina Jordan reports the consensus is that Florida is moving farther away from the recession.
A lot of new jobs are on the horizon, a million of them in Florida over the next seven years. But the unemployment rate, which is currently 11.9 percent, may stay in double digits until late 2012. That's the outlook from economists representing the Legislature, Governor's Office, and Department of Revenue. Economist Chris Lafakis with Moody's Analytics offers a similar forecast. He sees promising signs of growth, like more people getting back into the labor force because they are optimistic a job can be found.
"The level of initial claims for unemployment insurance has fallen to its
lowest level since the financial crisis erupted in late 2008 in the state," Lafakis said. "Also, statewide consumer confidence has increased for two consecutive months, and we're also seeing loan delinquencies moderate, especially delinquencies on credit cards."
That, he says, is evidence that households continue to repair their balance sheets. Lafakis believes Orlando, Tampa, and Miami are poised for a significant recovery in the next couple of years as housing prices stabilize, more vacationers come, and population growth rebounds.
"Consumers will be more able to relocate to Florida," he said. "Population growth fell to the slowest rate in the post-World War II era. We think that it'll probably be something similar in 2010, but then it'll start to accelerate beginning in 2011, and that infusion of workers and retirees from other parts of the country will help Florida regain its traditional standing as one of the faster-growing states in the nation."
While it may not feel like it, analysts point to June of 2009 as the end of the recession in Florida. Lafakis says that does not mean instant recovery, as many who are job hunting or trying to sell their home have found.
"By exiting recession, that only means that the economy is ceasing to further
contract. It doesn't mean that we are generating enough jobs to bring down the rate of unemployment, which still remains uncomfortably high."
Overall, he says Florida is headed in the right direction, but it will take time. Lafakis predicts construction will be the slowest area to recover, and tourism and trade will be among the fastest. He thinks it will be at least another year before housing prices bottom out thanks to excess inventory, the expiration of the home-buyer tax credit, and an influx of mortgage modifications.
"More than anything else, I think distressed sales are weighing down home prices and will continue to do so; things like short sales, foreclosure sales, and real estate owned sales, the so called REO sales where the bank has repossessed the home and they are attempting to sell it as well."
The economic forecast comes as an annual investment report from the State Board of Administration shows returns that exceeded goals for the last fiscal year. The SBA provides investment services to governmental entities, and oversees the state worker pension fund. Executive Director and Chief Investment Officer Ash Williams says any large investment institution can be expected to move in correlation with the broad market.
"Certainly when the broad markets went down and had really the most distressed period since the Great Depression during 2008 and the first half of 2009, our funds likewise suffered some near-term pain," Williams said. "But I think what's really important to remember is that we're investing over a very long horizon; we have a carefully chosen mix of assets that are designed to protect and compound value over a long horizon."
The Florida Retirement System pension plan lost billions of dollars on paper during the market decline, but has bounced back. For the fiscal year ending in June, the fund had a 14 percent return, about two and a half points ahead of target.