Turning the corner: South Florida’s economic recovery makes strides
South Florida’s economy looks much better than it did a year ago, but new worries about a global slowdown could undo all that progress.
07/06/2012 12:00 AM
07/07/2012 12:04 AM
South Florida’s economy suffered its latest threat Friday with a national jobs report that raised fears of a second recession. But anxiety aside, the region’s recovery looks far better than it did a year ago.
Housing appears to have turned a corner, with depreciating real estate giving way to rising home values. After two years of modest job growth, unemployment rolls are shrinking. Lower gas prices have consumers feeling a bit more confident than they did a year ago, while foreign dollars continue to bolster trade and tourism.
The relatively strong numbers offer another reminder of just how different the economy of 2012 looks from the dark days of 2008 and 2009. The deep dive has made South Florida’s recovery more dramatic.
“The recession hit Miami-Dade much harder than it did the rest of the United States,’’ said IHS Global Insights economist Karl Kuykendall. “We were expecting the rebound to be stronger as well. So far, it has been.”
A year ago, The Miami Herald offered a mid-summer report card on the recovery, assigning grades to five key economic barometers. We based the grades on how conditions had changed from 12 months earlier. We’ve repeated the exercise this week, and the rebound received higher marks.
As the summer of 2011 began, South Florida’s job market earned a D+, thanks to growing unemployment rolls. Since then, unemployment has dropped from 10.7 percent to 8.7 percent, helping improve the grade to a B. Spending also moved up from a D to a B, thanks to continued gains in taxable sales, lower gas prices and higher consumer confidence.
The upgrade doesn’t reflect the relatively battered state of the South Florida economy: home prices at levels not seen since 2002, unemployment close to 30-year highs, and spending still about a year away from erasing the ground lost over the last six years.
But the improvements do show what’s at stake as South Florida residents and businesses ponder their next moves in an increasingly uncertain time.
“In January, we saw a little bit more activity,’’ said Victoria Villalba, president of the Victoria & Associates employment firm, which places temporary workers with employers. “But in April it just became quiet again. April, May and June have been scary quiet.”
Friday’s jobs report punctuated a three-month stretch that saw economists shift from optimism that the recovery would hit escape velocity in 2012 to fears that a double-dip recession was at least a possibility. The federal labor agency reported the economy created only 80,000 jobs in June, slightly less than what already-glum analysts had predicted. Unemployment remained stalled at 8.2 percent, compared to the 9.1 percent rate recorded in June 2011.
South Florida won’t receive its June jobs report until later in the month, but recent statistics show a significant slowdown. Miami-Dade, Florida’s largest local economy, saw its job growth cut nearly in half in May to just 15,000 new positions a month. In May, Broward suffered its first yearly job loss since September 2010. The last time Broward shifted from positive to negative hiring was December 2007 — the first month of the U.S. recession that officially ended in June 2009.
Healthcare, tourism and retail remain the hiring stand-outs — evidence of South Florida’s popularity with retirees and vacationers. Even so, tourism scored one of the lowest grades in our 2012 report card. That’s largely because hotel rates and tourist arrivals surged in 2011; this year’s increases were strong but couldn’t keep up the rapid pace.
“Last summer we saw 20 percent and 30 percent increases” in hotel-tax collections, said Rolando Aedo, chief marketing officer for the Greater Miami Convention and Visitors Bureau. “That kind of astronomical growth is not sustainable.”
May finally saw Broward’s hotel taxes return to record levels for the year, a milestone Miami-Dade’s lodging market hit in the spring of 2011. “We’re going to have a strong summer,’’ Nicki Grossman, Broward’s tourism director said. A sales team in Germany this week reported increased bookings, enough to make up for declines from euro-zone countries with troubled banking systems. “There is a lull from Spain, there is a lull from Italy, there is a lull from France,’’ she said.
While Miami International Airport continues hitting records each month, Fort Lauderdale-Hollywood’s numbers are off this year thanks to Spirit shifting flights elsewhere. Cruise-ship traffic also was down in Port Everglades and Port Miami, but officials at both ports blame the decline in temporary changes in ship itineraries.
With room revenues moderating, hotels’ two-year hiring surge may not be able to compensate for weak job growth in other sectors. But hotels and retailers — not to mention real estate agents — are counting on wealthy Latin Americans to continue spending freely in South Florida and provide a buffer from whatever woes Europe might cause.
“Tourism and Latin American exposure are insulating South Florida from a lot of what’s going wrong in the national economy right now,’’ said Wells Fargo economist Mark Vitner. “Miami is holding up better than the rest of the country.”
At Miami’s Bayside Marketplace, restaurants expect another busy summer of quinceañeras — parties Hispanic parents throw for their daughters’ 15th birthdays. The twist: The downtown retail complex expects about 10,000 attendees in July Latin America alone .
“We had one last Saturday, and it had four chartered buses. They were from Venezuela — all young girls,’’ said General Manager Pamela Weller. “July is usually a good month for us, but this year August is too. It’s about a 3 percent increase.”
Foreign dollars help explain South Florida’s broad rebound in spending, with taxable sales retaining its B grade from last year with another 7 percent gain for 2012. But with consumer confidence slipping to a six-month low in the latest University of Florida survey, shoppers may be more frugal this summer.
Frances Camp owns a Subway franchise in Coconut Grove, and she saw the 2007-09 recession play out in customers’ orders. They kept eating sandwiches but held off on the side orders and desserts that boost profits. So far, Camp sees no signs of trouble.
“People are still ordering chips and cookies,’’ she said. “And frozen yogurt.”
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