ORLANDO – Even as the nation’s unemployment rate has fallen to its lowest level in four years, at 7.8 percent, Florida’s own jobless rate was much higher in August, at 8.8 percent.
And the truth is, Sean Snaith said, that the state and local hiring picture remains weak, and probably will stay that way through the end of this year.
That’s the bad news, said Snaith, the director of the University of Central Florida’s Institute for Economic Competitiveness, in an interview with Freeline Media.
The good news, he added, is that the pace of economic development – and future job growth – should start to pick up at an accelerated rate in 2013.
And the reason not much is moving forward this year? Snaith, a nationally recognized economist in the field of business and economic forecasting, blames the presidential election, and uncertainty over what direction the nation is headed in.
Until voters make a decision on Nov. 6, businesses remain in a holding pattern, he said.
“Right now, A — it’s the elections,” he said. “And B, it’s the fiscal cliff we’re coming up against with the slated expiration for a number of tax cuts in 2012, and that’s followed by the across-the-board spending cuts that kick in in 2013. How Congress and the president will handle those things, that remains to be seen.”
And that uncertainty about what’s going to happen in Washington, Snaith said, is filtering throughout the country, generating a sense of unease among businesses, who are unwilling to make a firm commitment to large scale hiring until they have a better sense of how decisions being made in Washington will impact their bottom line.
That’s why, Snaith said, the nation only created 114,000 new jobs in September, when at least twice that number is needed to keep up with population growth.
“I think focusing solely on unemployment as the main metric of how the economy or the labor market is performing can be a bit misleading,” he said. “We need to take a look at not only what’s happening with the unemployment rate, but also what’s going on with payroll growth.”
And that simply is not moving forward as quickly as so many had hoped.
But while Florida and the Orlando metropolitan area continue to suffer from unemployment rates higher than the national average, Snaith said he expects the region to begin to see real improvements in 2013. He credits the region’s ongoing problems – and the potential for a stronger recovery – to one key factor: the local housing market.
It soared between 2004 and 2007, as builders struggled to keep up with heavy demand for newly built homes in this region, and then crashed painfully when the bubble burst, leaving behind a sky-high home foreclosure rate.
Today, he said, the region’s housing market is somewhere in-between those two extremes.
“It’s sort of a tale of two markets,” he said. “I think the housing market is on a flat, bumpy path, not really going up, not really going down. Transactions for buyers purchasing directly from the seller, those homes are selling quickly, and often times they are receiving multiple offers. That’s a good sign. But when you look at distress sales and short sales, they are bringing down prices as well.”
A short sale is when the owner of a home is no longer able to sell the property at the same price it was purchased at, and offers to sell it for a price well below what is owed on the mortgage. The hope is that the bank will write off the remainder of the debt, rather than allow the property to fall into foreclosure.
Despite Florida’s higher than the national average jobless rate, Gov. Rick Scott has noted that Florida’s economy is improving, including the fact that the state created 28,000 new jobs in August.
“That is 28,000 more Floridians who can now support their families,” he said. “Already, Florida’s online job ads increased 14.4 percent over the year, and Florida’s median home prices were up 7.8 percent over the year. We are shrinking government and the private sector is making up the difference.”
The governor also credited his efforts to balancing the state budget and cutting property and corporate taxes as setting the right climate for new business growth.
“Even though we still have a lot of work to do, this positive economic news is welcome,” he said. “It is my job as Governor to ensure that every Floridian who wants a job has the opportunity to get one, and I will continue to work every day until we reach that goal. We are taking the steps needed to move our state in the right direction.”
But Snaith said there isn’t much the state government can do to grow the economy, since the state has so few strong tools at its disposal.
“I think it’s difficult when you’re looking at the state or local government level at policies or actions taken,” he said. “The caliber of policy weapons available to the governor and state government get smaller and smaller. At the federal level, we can run a trillion dollar budget deficit, and in the state we can’t. They don’t have tools like that at their disposal. The best I think politicians can do at that level is prepare for when the larger cycle turns. I think that is the best we can hope for.”
So far, jobs in Central Florida have come from three sectors, Snaith said: tourism, health care, and professional business services.
“Tourism has been the backbone of the economy, but it’s been a bit erratic and it hasn’t been consistent from month to month,” he said. “Health care, on the other hand, has added jobs throughout the recession.”
He credits that in part to the state’s large senior and retiree population.
But Snaith also thinks Central Florida will begin to pull out of the economic doldrums much more rapidly next year as the region begins to feel the full impact of several major development programs now in the works. That includes transportation projects like SunRail, the 61-mile light rail system that will cover four counties and have four stops in downtown Orlando, and the extended beltway around State Road 417.
Health care will also play a role, he said, particularly the Lake Nona Medical City, a health and life sciences cluster in east Orlando that is home to hospitals, universities, research institutions and life science companies.
The Medical City is anchored by the University of Central Florida Health Sciences Campus, the Sanford-Burnham Medical Research Institute, the VA Medical Center, Nemours Children’s Hospital, the University of Florida Academic & Research Center, and the MD Anderson Orlando Cancer Research Institute.
These projects, Snaith said, will begin to pay off for the Orlando area, and likely more impressively in 2013 than in any of the past five years.
“I think we suffer from some of the same problems as the rest of the country,” he said. “But longer term trends, like population growth, are still in our favor.”
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