By Jeff Harrington, Times Staff Writer
In Print: Saturday, January 24, 2009
Florida economists are growing accustomed to repeating a phrase no one likes to hear: It's worse than we thought.
As a jarring punctuation mark to a dismal year for job seekers, the state's unemployment rate rocketed from 7.4 percent to 8.1 percent from November to December.
Florida shed a quarter million jobs in 2008, exiting December with 752,000 jobless workers out of a labor force of 9.3-million, according to the Florida Agency for Workforce Innovation.
In the Tampa Bay area, unemployment rose to 8.3 percent, the worst major metro area in the state.
Given the unexpected acceleration in lost jobs, economist Sean Snaith of the University of Central Florida said Friday that the likelihood Florida will reach double-digit unemployment this year "has gone up significantly.'' Indeed, a handful of Florida counties are already there, including Hernando, with an unemployment rate of 10.9 percent.
Historically, unemployment continues rising months after a recession ends. Under one best-case scenario, according to economists, the recession ends in the second half of 2009, and unemployment rises into 2010.
What does that mean for Floridians?
If 2008 was the recession's clarion call, 2009 is shaping up as the year of austerity.
Banks are restricting lending to the most creditworthy consumers, while paring down and eliminating lines of credit for others. To the dismay of the tourism industry, the U.S. Travel Association forecasts fewer people traveling in the country this year, and spending less when they reach their destinations.
Even enthusiasm for the Tampa-bound Super Bowl is tempered, with PriceWaterhouseCoopers projecting visitors will spend $150-million — $30-million less than if the economy was thriving.
The age of austerity also is rewriting the ground rules for small businesses trying to squeeze a buck. Some are slowing down payments to vendors or lobbying heavily for discounts.
Henry Glime, president of Gallo Building Services in Tampa, isn't reluctant to negotiate with materials suppliers and contractors to find a pricing point that makes sense.
"You have to ask until they say, 'No,' '' he said. "If everyone gives a little bit, the whole project works and everybody ends up being successful.''
Contraction is broad
The housing downturn led the way into the recession, but it doesn't appear ready to lead the way out. Housing starts plunged to a record low in 2008, and home prices continue to fall. By far, construction took the toughest punch last year, accounting for 88,200 lost jobs statewide, or 30 percent of the total loss.
Heading into 2009, the contraction is much more spread out; Microsoft and Disney are among corporate icons announcing job cuts this week.
Retailers are particularly vulnerable, as those that endured disappointing holiday sales are still struggling to entice shoppers. Among the latest moves: Saks Inc. laid off 1,100 workers and cut out its 401(k) matching program, while Williams-Sonoma trimmed 18 percent of its work force, slashed inventory and cut back on catalog mailings.
Businesses find themselves in uncharted territory, which only intensifies the frustration and uncertainty.
The last time Florida's unemployment was this high was September 1992, a year after that recession ended. But unlike that recession and the ones in the 1970s and 1980s, this one is exacerbated by a credit freeze that shows no signs of thawing.
"Florida entered the recession a little earlier than the rest of the country, but there is no sign that the downturn will end sooner there,'' said Mark Vitner, senior economist for Wachovia Corp. "Home prices are still declining across much of the state, putting downward pressure on household wealth and making it more difficult for residents to refinance home mortgages and take advantage of falling interest rates.''
Stimulus package
As with any recession, the depth of the angst and the pace of the recovery vary house by house, industry by industry.
A potential $850-billion federal stimulus package could mitigate the pain. So, too, could moves by federal regulators to keep interest rates low, shore up banks and buy toxic mortgage-backed securities. But don't look for any quick-fix panacea or a V-shaped recovery once a turnaround begins.
"We shifted to a full-blown panic in September, and the thing about panics is you don't un-panic,'' said Scott Brown, chief economist with Raymond James Financial in St. Petersburg. "It takes a while to restore confidence.''
Time, in fact, may be the only solution. Enough time for investors to start trusting Wall Street again, for the shell-shocked but still gainfully employed to start eating out and shopping a little more. Time for banks to start taking a modicum of healthy risk.
Snaith, the UCF economist, thinks a stimulus mix of tax relief and government-backed infrastructure projects will at least mark a turning point.
"What it does is start to put a floor underneath this drop into despair we're seeing and give people a sense that there is a bottom, and we will start to climb out of this recession as we have every other recession in the past,'' he said. "It will get worse, but we're not going to see the Great Depression either. Let's get a reality check. Unemployment was 25 percent then, and we're not going to see that.''
