ITES: Profiling Florida’s Economy

This is the third entry in ”It’s the Economy, Stupid” a 15-part series analyzing the local economic news in five swing states.

Florida from Outer Space

It is in the Sunshine State where North is south and South is north – politically at least. It is a state made infamous for butterfly ballots and hanging chads, and is famous for Mickey Mouse and Miami Beach. So unlike the debatable swinging of Pennsylvania, it is the Southeastern state of Florida that often captivates audiences on election night with its thin-margins of victory. As was the style last week, this post will delve into the state’s political and economic trends.

Mitt Romney avoided the state’s trend of narrow margins, with his more than 14-point win over Newt Gingrich, et al. on Tuesday. The same was not true for then-Senator Obama in his 2.7% victory over Senator McCain in 2008. That was the first time in two Presidential elections that the state gave its electoral votes to a Democrat. But breaking the Republican streak did not mean that Florida was ready for a baptism in blue.

The 2010 Republican resurgence found its adherents in Florida. The State Legislature enjoys Republican supermajorities in both Houses – controlled by the GOP since 1996. It added four Representatives to its lopsided 19 to 6 Congressional delegation, and with the election of Marco Rubio, the party retained its US Senator. A silver-lining for Democrats, and a reminder of Florida’s quirky electorate, was the 1.15-point difference in the race that had Republican Rick Scott win the governor’s mansion.

If President Obama were to carry the state this year, then Democrats would be thrilled no matter the margin. This is especially true in 2012, as the state will have 29 electoral votes – an increase of two from the last election. Despite the 2010 Republican surge, Democrats are favored in party registration, enjoying a 5-point lead against their GOP counterparts. But that margin can rapidly disappear when independent or third-party supporters decide to be kingmakers – together they represent 23% of the 11.2 million person electorate. [1] Those voters represent a sizable piece of the state’s population.

At 19.1 million residents, Florida is the 4^th largest state by population[2]. As was the case for Pennsylvania, that rank is replicated for its economic output. Its annual Gross State Product of $748 billion is the 4^th largest in the nation. But similar to its Northeastern swing state peer, its GSP is less impressive on a per capita basis. At $35.8 thousand, it is 38^th in the country and below the national average. That ranking may be due to its current employment situation.

Even as the national unemployment rate has begun to decline – now at 8.5%, Florida’s higher baseline means that it is still stubbornly at 9.9%.  Many of those unemployed are the construction workers who were left soaked when the housing bubble popped. There are more than 350 thousand fewer employed construction workers today than there were at the sector’s peak in June 2006, a decline of more than 50%. For comparison, there are just more than 900 thousand individuals unemployed in the state. Unemployed construction workers are likely a significant contributor to that figure (more on that sector later).[3]

In spite of its huge job losses, Construction was never one of the state’s largest industries. That honor goes to Trade, Transportation, & Utilities, which represents 20% of the labor market. It is fitting that trade receives such a large share as it is more than $85 billion industry, putting it 4^th-largest (yet again that rank) in the country. It has the second most opportunities for trade, with its 20 federally-sanctioned foreign trade zones (FTZs) only behind Texas.

Its next three largest industries control approximately the same shares, with Education and Health Services; Government; and Professional and Business Services all representing just more than 15% of the labor market. If the state’s $60 billion (and 84 million visitors) per year tourism industry appears conspicuously absent from the list, Leisure and Hospitality comes in 5^th with 13% of the market. Most of those industries appear in the list of the top-five largest employers. From the largest they are: University of Florida, Florida Hospital Orlando, Universal City Development Partners (Universal Studios), Pensacola Naval Air Station, and Orlando Health.[4] Still, with 6 in 10 Republican voters identifying the economy as their number one issue in the primary exit polls, this entry now turns again to one of the biggest issues in Florida’s economy.

As discussed with regard to construction jobs, the state has yet to recover from the devastating collapse of its real estate bubble. In the city of Tampa, home prices fell 43.9% from their peak in April 2006 to the end of the recession in June 2009. Foreclosures are a serious concern too. At a rate of one foreclosure for every 360 homes it is 5^th worst in the nation. Just fewer than 170 thousand homes were being foreclosed on in December 2011. Its housing vacancy rate is third worst in the nation at 17.5%, behind only Maine and Vermont, but first in total number of vacant homes. As with Pennsylvania’s Marcellus Shale, Florida’s ongoing housing crisis will receive more attention in future posts.

The three newspapers that will inspire those future posts are the Tampa Bay Times with an average weekday circulation of more than 138 thousand readers, the Orlando Sentinel with more than 170 thousand readers, and the South Florida Sun-Sentinel of Miami with just fewer than 150 thousand readers.[5] But before this blog can tackle their articles, three more swing states need to be introduced.

Next up: Colorado.

STATE CLIPS:

Pennsylvania: “Union Files Complaint Over Philadelphia School-Nurse Cuts” Philadelphia Inquirer February 1st

A $700 million budget shortfall has left Philadelphia schools with 47 fewer nurses at the start of the year. According to the teacher’s union, this means that students could receive lifesaving medications and first aid treatment from unqualified school personnel.

Florida: “South Florida Gambling Plans Head for Trouble” South Florida Sun-Sentinel February 1st

State House and Senate sponsors of plans to expand gambling in South Florida are driving their bills further apart in efforts to secure the votes necessary for passage. Advocates argue that it will boost the economy and increase jobs, while others cite a study suggesting that crime would increase as much as 12 percent and cost $3 billion over ten years.

Colorado Preview: “Foreclosures Down 25 Percent in Colorado in 2011” The Denver Post February 1st

In a bit of news that Floridians would crave, Colorado’s housing market has appeared to stabilize as foreclosure rates have fallen to 2006 levels.