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Signs of economic recovery in South Florida? No turnaround, but there are glimmers of hope
Economic climate: Some trends to watch
By Harriet Johnson Brackey | South Florida Sun-Sentinel
On Wall Street, the stock market has gone up 12 days out of the last 20. Consumer confidence is up a tick, in Florida and across the nation. Even the housing and auto industries are showing unexpected signs of life.
In the steady downbeat of news about the economy in recession, a few signs of hope have surfaced in recent weeks.
A turnaround? No one expects that from the economy this year. But at least some indicators suggest the economy could be close to hitting bottom, economists say.
It won't be a soft landing. New unemployment figures due out today are expected to show the national jobless figure rising to 8.4 percent, from 8.1 percent. Florida's rate is higher, at 9.4 percent. And despite the recent gains on Wall Street, including Thursday's 216-point rally of the Dow Jones Industrial Average, stocks have only slightly recovered from the dramatic slide that began in October, 2007.
"We may be shedding jobs for a little while," says Chris McCarty, who runs the Florida consumer confidence surveys. "But on the bright side, it does look like the stock market is developing a floor here."
Here are some reasons economic forecasters are beginning to sound more optimistic:
Housing sales rise
The Florida Association of Realtors reported that median home prices statewide rose in February to $141,900, the first monthly uptick in six months. In February, the number of existing single-family homes sold in Broward and Palm Beach jumped by 39 percent and 33 percent, respectively, over the year before.
The spike in sales is fueled by lower South Florida housing prices, which, on average, are about 45 percent below the peak in 2005. "A couple of months ago, nobody wanted to buy, at any price virtually," said economist Brad Hunter of MetroStudy.
Interest rates have dropped and first-time home buyers and bargain-hunters are becoming active.
Michael Arno, 33, thinks it's time to buy.
"I'm getting ready to start a family, and renting doesn't work any more," he said. "There are a lot of great buys out there."
Arno, who performs cardiac sonograms at JFK Medical Center, hopes to snap up a home in West Boynton for $75,000 less than he would have paid last year.
Stocks moving up
Typically, the stock market rises before a recession ends. Stocks had a great run in March – climbing 21 percent over a two-week period.
Rick DuPuis, president of Royal Capital Management in Boca Raton, which has $65 million under management, said "things are starting to look a little wee bit up." But he notes that normally stocks will bounce around the bottom before truly turning around.
Even after the recent surge, the Dow Jones Industrial Average, at 7,978.08 – its closing Thursday – remains well below its peak.
The three-point rise in Florida's index of consumer confidence in March was a surprise, considering Florida is in a "deep recession," according to Economist Antonio Villamil, dean of the School of Business at St. Thomas University in Miami Gardens.
McCarty didn't take the boost in the confidence index as a sign of things to come. But he did note that the spirits of Florida's many retirees tend to fluctuate along with the stock market that they watch closely. "When it goes up, they feel good."
McCarty expects the confidence level to continue to go up and down, by a few points either way, until the economic and political news shows a clear trend toward the positive.
A slight rise in auto sales for March cheered beleaguered automakers, which are still selling about 60 percent fewer cars than the average for recent years.
"It's one month in a row, and it's of interest and there may be a small sign of hope," Chrysler President Jim Press said on a conference call. "But if you look at the trends out there, there's a lot of concern."
The number of autos and light trucks sold in March nationwide was 857,773, compared with 688,909 in February. If that rate were to hold for a year, automakers would be selling 9.86 million units.
That pace cheers Richard Baker, president of the South Florida Automobile Dealers Association, who pointed out that General Motors and Chrysler say their compaines could be "viable" at a pace of 9.5 million autos a year.
The Florida Department of Revenue said taxable sales at auto dealers in January were about 13 percent higher than in December.
Richard Baker, president of the South Florida Automobile Dealers Association, is optimistic for the long term. He said automakers are selling about 4 million fewer cars than people are sending to the junkyard on an annual basis, and so he sees demand building.
"People are going to have to come back into the marketplace," he said. "Eventually, you have to buy a car again."
Auto industry officials are also pinning hopes on a new program to back GM and Chrysler vehicle warranties and new tax breaks for cars purchased this year.
Florida has been in a recession for two years, in the estimation of UF Economist David Denslow, who said this all began in March 2007. Now, Denslow said, he's "becoming a little more optimistic."
He still sees unemployment growing, perhaps reaching as high as 10 percent nationwide and even higher in Florida. But he's expecting the turnaround to begin next year.
Villamil says some of the signs economists look for — orders for durable goods and consumer spending — are "starting to level off a bit. The steepness of the decline is less." "There are glimmers of light," he said. "But they are at the end of a very dark tunnel."
Information from Bloomberg was used in this report.
Harriet Johnson Brackey can be reached at email@example.com or 954-356-4614.
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