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FLORIDA’S ECONOMY

An overwhelming majority of respondents (73%) to last week’s Quick Poll believe Florida’s economy will get worse before it gets better, while only about a quarter of them (27%) think the recovery is straight ahead. David Denslow, professor and research economist with the University of Florida Bureau of Economic and Business Research in Gainesville, is among that majority, having predicted earlier this year that a recession is all but officially declared in this state. To make matters worse, the Florida Agency for Workforce Innovation blamed faulty surveys for prior reports that the state gained thousands of jobs last year when those were actually lost. Denslow shares his thoughts on the Florida economic outlook:

“Florida is going to stay down for a while as a national recession is increasingly more likely. That’s going to make the adjustment of the residential market in Florida take much longer. Home prices will have to fall a bit more, and it will be longer before building starts picking up.

“Obviously that’s going to have some impact on commercial real estate. About half the time there is a collapse in residential, it’s associated with one in commercial. But about half the time it isn’t, so the big question is: Which will be the case this time?

“The Florida economy is suffering primarily from the bursting of the residential bubble and it’s got a ways to go on that. I tend to be pessimistic on that score because house prices were doubling between 2000 and 2006, while rents rose 10% to 15% on average.

“I think we’ll lose jobs for about a year because our job growth was so dependent on the state economy overall, and on the migration of retirees. Tourism has been a relatively good sector until recently, and it has been weakening but not as much.

“We used to think that if the economy went down, people would come to Florida for vacation instead of Europe. The plunging dollar has helped, but now it doesn’t seem to have as much impact as it had for the past year. That might spill over into hotel and restaurant construction.”

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