Orlando Real Estate News

TALLAHASSEE, Fla. - July 22, 2009 - The forecast from the Florida Legislature's Office of Economic and Demographic Research brings the state's predictions in line with those of at least two nongovernment economists who offered similar outlooks last month.

They predict that Florida's recession will hit bottom in the middle of next year, or six months later than state officials previously expected, according to a new forecast.


State forecasters also are predicting an unemployment rate near 11 percent - with close to 1 million out-of-work Floridians - through the end of 2011. They also pushed back their forecast for the start of the economic recovery by six months after seeing last week's reports of increased unemployment and foreclosure rates.

"We had hopes there would be changes at the national level that would benefit Florida more," said Amy Baker, head of the Office of Economic and Demographic Research. "But everything that's been done with the stimulus, with fixing the credit markets, hasn't had enough of an effect."

The new numbers could force state lawmakers to cut services or raise taxes again, even after a difficult budget season this year.

Based on the new forecast, the state will need to come up with an additional $2 billion to balance the budget, said University of Florida economist Dave Denslow.

This year, lawmakers balanced the budget using $2.2 billion in new fees and taxes and $5 billion in federal stimulus money.

"This is a double negative," said Don Gaetz, a Niceville Republican who chairs the Senate economic-improvement committee. "When more people are out of work and there are more foreclosures, that shows there is not the business activity we need for a recovery. And when people are out of work, they're more likely to need food stamps, Medicaid and housing assistance - and that costs money."

"This recession has created a whole new layer of poor folks who don't want to be on Medicaid or food stamps but are forced into it by joblessness and economic conditions," Gaetz added.


Still, Florida is not facing anything like the budget crisis confronting California, which is facing a $26 billion budget shortfall. Economists interviewed Tuesday said the Golden State has unique issues: higher salaries and benefits for government employees and powerful unions to protect them, a two-thirds legislative majority required for budget approval and tax increases, and a variety of voter-approved mandates that tie lawmakers' hands.

"We share similarities, but we don't have the same extremes," said Sean Snaith, a University of Central Florida economist who previously worked at a college near Sacramento.

Snaith's most recent Florida forecast, published last month, called for a 10.6 percent unemployment rate next year, followed by 9.8 percent in 2011. He shows economic growth resuming in the second quarter of next year.

Wells Fargo economist Mark Vitner made similar predictions last month

Economist Tony Villamil, dean of the business school at St. Thomas University in Miami Gardens, was a bit more optimistic.

South Florida, in particular, could show a faster and stronger recovery than other parts of the state because of the region's more diverse economy, which is less reliant on population growth and real estate development, said Villamil, who was undersecretary of commerce under the first President Bush.

He said Miami-Dade's unemployment rate is unlikely to get much higher than June's rate of 11.5 percent, before seasonal adjustment. "If it peaks at 12 percent," he said, "I will be surprised."

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