Home  News Local News Florida economic outlook gloomy
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Written by Dr. Garth A. Rose
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Friday, 25 July 2008 |
 Florida’s economic news and outlook keep getting worse. It was announced last week that foreclosures in the state, particularly in South Florida, was among the worst in the country.
Over the past weekend this was followed by an announcement by the Department of Labor that Florida with 78,100 lost jobs led the nation over the past year in job losses. There are almost daily reports of job losses in the state.
On Tuesday it was reported that with pressures being placed on the cruise industry because of high fuel prices one of Miami’s largest, and the Word’s second largest, cruise lines, Royal Caribbean Cruises plans to cut 400 jobs and slash its operations expenses by $125 million as the company’s second quarter earnings fell by 34 percent.
Any glimmer of hope was dampened when economists in the state’s administration predicted that the economic situation is not expected to improve for another year at least. The prediction is based upon expected downfall in the state’s housing market, a market that is very crucial to the state’s economy. Reports indicate that the state’s economist are projecting that new housing construction will decrease by approximately 60,000 units this year, a decrease of 78 percent from 283,000 units constructed in 2005.
The Florida Senate’s chief economist, Alan Johnson, reportedly said that the combination of fewer homes being sold along with increase in foreclosures will increase the inventory of unsold houses thus reducing the need to build new ones.
Adding to the state’s economic problems is the possibility of its tax revenue being less than was projected. With more people losing jobs, the consumers will have less money to spend resulting in a fall in sales-tax revenue. Without a significant increase in tax revenue the state would be forced to implement further cuts to the $6 billion it cut from its current budget which went into effect on July 1. This would result in even less money for schools, health care and to assist the poor and needy.
The unemployment figures for the state would have been worse were it not for employment gains in the health, education and low-paying services, according to reports, which indicated 77,000 jobs loss in construction and 24,000 in manufacturing over the past year.
Economist Bradley Mimms, head of a Miami economic think-tank, told National Weekly that under normal circumstances the fall of approximately $50,000 in the median value of South Florida homes would attract an inflow of migrants from other countries and states, but the problem is that such migrants face a wall where getting jobs are concerned. “If the state could provide jobs, new residents would come, because the housing prices are falling. However, on the other hand, job creation is being strangled by a very tight credit market. Banks are just not lending, as they once did, especially for small businesses. However, creative ways must be found for retaining existing, and providing new, jobs or this economic situation is sure to worsen,” said Mimms.
“I really think the state will have to find new policies for raising taxes to avoid further budgetary cuts should property and sales tax revenue continue to fall,” he added.
The combination of the tight credit and the dip in circulation of money in the region’s economy is affecting not just housing demand and airline and cruise line tickets. Rather, the situation has trickled down to affect micro business people like mechanics, barbers and beauticians. A mechanic in Sunrise says he is repairing an averaging of 12 vehicles weekly down from the norm of six daily six months ago. Barbers and beauticians are complaining of drastic decline in customers as they have less money to spend.
Winston Green, a male nurse employed at Baptist Hospital in Kendall expressing his good luck in being employed told the National Weekly, “Having a job is a real blessing with the economy so tight. People just have to take it one day at a time and pray for miracles.”
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