A Glimpse into Florida's Economic Future

“It’s not a great, rapid recovery, but it is there and we won’t have to wait until 2013 or 2014 to see it,” he said.

Denslow, a professor and research economist at the University of Florida, addressed the Economic Club of Florida in Tallahassee Friday on “The Economic Influence of Florida’s Changing Demography.”

“What’s clearly going to happen is the rate of growth in Florida will slow down,” Denslow said. “There will not be as many construction and real estate jobs as before.”

Though Denslow believes the state will not see a revival of the dizzying economic growth of years past, he insisted the economy has turned the corner. “We have to remember how bad things were in Fall 2008,” said Denslow, noting there were fears of a second Great Depression, with unemployment reaching 20 percent.

The economist said the $787 billion federal stimulus helped to some extent. While conceding it would be debated for years to come, he said the stimulus kept unemployment from getting worse. “Government pulled out every stop it had to avoid a depression.”

By March 2009, Denslow said that America managed to avoid a depression.

He feels the nation is headed for recovery, but it will not be a quick one. He predicts that the economies of Western European nations will level off, but other nations, especially Brazil, China and India, will see rapid recoveries. “There still are difficulties. The unemployment rate will come down gradually.”

Denslow agreed with National Economic Council Director Larry Summers’ quote that “what we are seeing is a statistical recovery and a human recession.” While recovery may be coming, with Florida facing record unemployment rates, it was easy to be pessimistic. Forty percent of unemployed Floridians have been out of work for more than six months.

While most experts say Florida will see a gradual reeducation in the unemployment rate, dropping from 12.2 percent presently to 8 percent or 9 percent by 2014, Denslow remains more optimistic about Floridians getting back to work.

He said that Florida’s economy and its unemployment remained tied to the housing market. Noting that the number of two parent families with children were declining, Denslow insists this did not mean that there would be a housing crisis. “The demand for housing,” he said, “has nothing to do with kids.” Denslow said that families with children spend on their kids and not their houses.

Denslow reviewed the changes in the housing market that Florida has seen over the last 30 years. He said that the housing market kept pace with the rate of inflation from 1980 until 2000, before housing prices started increasingly drastically.

David Denslow

Denslow said too many people insisted there was no housing bubble. He specifically targeted David Lereah, who formerly served the chief economist for the National Association of Realtors. Lereah wrote the book Why the Real Estate Boom Will Not Burst and was very bullish on the future of the market.

Despite the problems, Denslow remains optimistic about Florida’s future. He said that demographics will help Florida’s real estate market -- and its recovery. He said most people who buy second homes are in their 50s and 60s. And, at present 2 million Americans retire every year but, by 2025, that number will increase to 3.5 million. This growth of people in their 50s and 60s looking to retire or purchase second homes will solidify Florida’s housing market. Denslow said that the increase in older Floridians will lead to a number of new job opportunities including high-end positions in finance and medicine.

Denslow said it was easy to be pessimistic about Florida’s future as more people leave the state. He referred to statistics from the Bureau of Economics and Business Research that pointed to the decline of new electronic hookups in August 2008. This was the first population drop in Florida since 1946, when service members left Florida after the close of World War II.

Reviewing the net migration numbers, Denslow said that the real estate bubble and the continuing lack of jobs forced people to move to Georgia, Tennessee and Alabama. However, Denslow said, despite these adverse conditions, people are still moving in. He expects more people to move to Florida to exceed people leaving it by 2011. “The net migration numbers are a source of great optimism for the state of Florida,” he said.

Denslow also said he expects the snowbirds to return. “A lot of people up north have seen enough economic recovery that they are in the market again, ready to sell their homes and buy in Florida,” he said.

Asked about the economic impact of immigrants in Florida, he said during the housing boom, immigrants from Latin America flocked to the Sunshine State to work in the construction industry, and these immigrants leased a number of the rental properties in the state. Some of them, he said, have returned to their countries of origin, because they've seen a reduction of violence there.

“This was a tremendous speech,” said former Gov. Wayne Mixson, who serves as an officer with the club. “Florida really needs to know what’s going on now.”

Kevin Derby, a reporter for Sunshine State News, can be reached at kderby@sunshinestatenews.com, or (850) 727-0859.