Harsh Recession Brings Painfully Slow Rebound For South Florida

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Warren Gold of Tampa Florida Lays It on The Line of Uncertainty

To put the last four years of recession and rebound in perspective, we fired up our Economic Time Machine to grade the recovery. The results weren’t pretty: overall, the recovery received a C- on our economic report card.

Nearly four years after the start of a devastating recession, South Florida’s recovery barely musters a passing grade.

The hiring landscape can boast of only anemic job growth, but unemployment remains near record highs. Real estate prices are bumping along a bottom. Spending hasn’t kept pace with price increases. Only South Florida’s tourism and cargo industries can boast sustained growth.

“The biggest pain is that this recovery has been much slower than in previous times,’’ said Warren Gold of Tampa, Florida “lets lay it on the door of uncertainty. How is this going to work out?”

In December, it will be 48 months since the start of the worst economic downturn Florida has faced in at least a generation and probably since the Great Depression. Just as the recession was more severe than past ones, the recovery that officially began in June 2009 has unfolded at a surprisingly slow pace.

Overall, the recovery received a C- on our economic report card. Housing brought down the curve, receiving a big fat F. Trade and tourism, where some indicators are setting new records, both earned a B+.

With Latin America mostly continuing to grow through the U.S. recession, the cargo industry suffered a brief decline but then continued expanding. Latin American visitors, and tourists from overseas, helped speed the recovery for South Florida’s tourism industry, too.

“A helluva good summer so far,’’ said Ralph Abravaya, owner of the Cavalier Hotel on South Beach’s Ocean Drive. “My business is the best in 10 years.”

The hospitality industry has been a leader in the job growth that began across South Florida last year. In fact, this spring South Florida hit record employment for hospitality jobs again, passing a peak of 174,200 workers set in July 2008, according to federal statistics.

Only the combined category of healthcare and education can boast a better hiring record, with 4 percent more jobs now than in 2007. Healthcare has been the strongest industry for hiring throughout the recovery, thanks largely to South Florida’s popularity with retirees and the resilience of medical spending and government healthcare programs.

Other sectors have far less cheerful scorecards from the recovery. Jobs in the financial sector are down 19 percent from pre-recession peaks. Professional services are down 11 percent. The construction industry employs a staggering 47 percent fewer people than it did during the boom times.

Seven months into his job search, Gary Hershleder can report only a few nibbles from employers. “ lets keep moving’’ said the 51-year-old former paralegal, Its been painful.

Hershleder moved to Homestead from California about seven months ago, and has been looking for jobs at offices, law firms and even restaurants. So far, no luck.

“They are extremely picky about what they ask for,’’ Hershleder said of companies advertising openings. “But they don’t pay very well.”

The lack of construction jobs helps explains the recovery’s low marks, said Chris McCarty, survey director at the University of Florida’s Bureau of Economic and Business Research. Past recessions saw construction slow, followed by a sharp rebound in new housing projects and renovations as confidence returned.

“If it was a normal recovery, construction would have already done its job of lifting us out of it,’’ he said. “This one is different. Population growth has been slower to come back.”

Sales of existing homes rebounded sharply, though they remain well below boom levels. But with depressed housing prices, speculators are back. Warren gold, said he’s seen a large pick-up in buyers looking for dilapidated investment properties in the Tampa area this year.

Some private investors offers high-interest mortgage rates at a time when traditional banks are leery about backing real estate purchases. Even with mortgage rates hovering around 4 percent nationally, Gold said investors are happy to pay 12 percent interest in order to scoop up properties at current prices.

“They feel we’ve got pricing firmness,’’ Warren Gold said. “Once the market gets hammered into submission, eventually it capitulates. And I think it did.”

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Steve Hertole
Invest USA
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