Economist Views of the Recession, Amendment 4, and the BP Oil Spill

By September 21, 2010Traditions Property Blog


What is going on in the state of Florida?  Economist, Sean Snaith, director of the Institute of Economic Competitiveness at the University of Central Florida shares his views of the present and future of the state on three major issues:  the recession, Amendment 4 and the BP oil spill.  Read below 

OCALA, Fla. – Sept. 20, 2010 – The good news is, the worst recession since the Great Depression is over, an economist told business leaders in Ocala.

The bad news is the path to recovery looks like it will be slow and gradual, according to Sean Snaith, director of the Institute of Economic Competitiveness at the University of Central Florida.

Snaith spoke at the 52nd annual meeting and luncheon of the Ocala Marion County Economic Development Corp. at Hilton Ocala.

He said forget about traditional depictions of peaks, recessions, troughs and recoveries shaped like the letters V, U, L, or the dreaded W; this particular economic cycle resembles a “gravy boat,” with a deep bowl representing the severe recession and a tapered spout representing the projected gradual recovery.

Snaith said the economic downturn has vaporized trillions of dollars in wealth from home equity, stocks and retirement accounts. Meanwhile, double-digit unemployment continues to be a problem. The most recent figure for Marion County, for example, is 14.1 percent.

“All of this is a recipe for slow growth in consumer spending,” he said. “When you consider consumer spending is 70 percent of our economy, you can’t expect a V-shaped recovery.”

However, if a V-shaped recovery, with an abrupt recession followed by just as rapid a recovery, is not in the cards, neither is the W-shaped cycle, known as the double-dip recession, according to Snaith.

“The reason is there’s a tremendous amount of stimulus money, namely from the American Recovery and Reinvestment Act, that has not yet reached the economy,” he said.

“This is going to preclude a double-dip recession, but the growth is not going to be quick enough for a V-shaped recession.”

Snaith took the opportunity to discuss Amendment 4, or the “Hometown Democracy” initiative, under which proposed comprehensive plan changes would be put before voters.

The economist said he was empathetic to citizens concerned about reckless development and damage to the environment, but suggested measures other than voting for Amendment 4, like holding their elected representatives accountable, or contributing to watchdog groups.

“Direct democracy sounds better than it actually is,” Snaith said.

“It can be the crack cocaine of governance, and California is a good example of what a crackhead looks like. When I lived there, I saw ballots that look like the Ocala phone book.”

Snaith also touched on a variety of other topics, saying:

• Economic impacts in Florida from the BP oil spill are likely to be much less than the worst-case projections.

• Housing is showing some improvement in single-family existing home sales, but “prices will ultimately tell us when the market has bounced back.”

• Commercial real estate “still has a lot to work out,” with some developers likely to have trouble paying their mortgages, which will come due for repricing. This in turn will put pressure on banks, and more failures are likely.

Ocala’s metropolitan area is projected to be No. 1 in the state in terms of average percentage of population growth from 2010-13, with a figure of 1.4 percent. This is due largely to property insurance issues in coastal Florida counties.

Snaith closed his talk by emphasizing the importance of focusing on diversification and labor force education and training.

“The days of job security are gone. They went with our fathers and grandfathers,” Snaith said.

Copyright © 2010 Ocala Star-Banner, Fla., Richard Anguiano. Distributed by McClatchy-Tribune Information Services.