Florida recovery

Florida’s economy should start to see the leading edge of a recovery this year, but a return to pre-recession growth levels won’t begin in earnest until 2011 and will likely take two years after that.

ORLANDO - Florida’s economy should start to see the leading edge of a recovery this year, but a return to pre-recession growth levels won’t begin in earnest until 2011 and will likely take two years after that, according to a new University of Central Florida report.

The Florida & Metro Forecast 2010-2013 was produced by economist Sean Snaith and UCF’s Institute for Economic Competitiveness. The full report can be found online at www.bus.ucf.edu/hitec/. A summary appears below.

Gross state product

Florida’s recession promises to last longer than the national recession, according to Snaith. Growth in Florida’s gross state product is likely to be muted through 2010 and into 2011 before a recovery ensues.

Real GSP growth will average 1.8% from 1Q 2010 through 2Q 2011, according to the report, with an acceleration beginning in latter 2011 and GSP hitting a 4.3% annual rate in 2012.

Personal income

Personal income growth should start to accelerate in 2010 following contraction at an annual 1.5% rate last year, according to Snaith. By 2011, the income growth rate should reach 4.9%, followed by 6.1% in 2012 and moderating to 5.7% in 2013.

By 2011-2013, once the recession has passed fully, real disposable income should grow at a 2.6% annual rate, according to the report, provided future state and federal tax rates remain benign.

Retail sales

A reverse wealth effect remains in play, Snaith said. With nest eggs dropping by as much as 50%, the national saving rate has jumped to between 4% and 5%. Consumers who feel poorer spend less, but a gradual recovery in consumer spending should begin in 2Q 2010. Consumer confidence has grown slightly since the worst of the national fiscal crisis, but 4Q 2009 holiday sales were expected to be lower than in 4Q 2008, according to the report.

Auto sales

A look backward will show new passenger car and truck registrations down overall for the fourth consecutive year in 2009 - the federal “cash for clunkers” program notwithstanding, Snaith said.

Registrations should begin to climb in 2Q 2010 but won’t reach levels seen in the “clunkers” spike until 2011. With an improved economy, new annual registrations could recover to 1.3 million by 2013, the report said.

Employment

Payroll employment growth slid 3.2% in 2008 and was expected to finish 2009 down another 4.5%, according to Snaith. Some growth should begin this year, but the average level of employment will continue to be below the 2009 average.

If payroll growth does take root this year, gains will build momentum only slowly throughout 2011 to reach 1.7%, Snaith said. Look for growth of 2.9% in 2012 and 3.2% the next year. Employment levels will not reach their pre-recession peak until 2014, the report said.

Job growth likely will not return to the construction sector until 3Q 2011, followed by a surge to 4.8% in 2012 and 7.2% in 2013 as both the residential and commercial markets rebound.

Job growth may turn positive for the professional and business services sector this year, followed by acceleration to positive 7.3% in 2011, 8.1% in 2012 and 7% in 2013.

Manufacturing job growth may hit 1% in 2011, followed by 3.8% the next year, the report said. This will be aided by a recovering economy and a weakening U.S. dollar.

Unemployment

Unemployment in Florida should peak this year, though it will remain above the national rate, Snaith said. The unemployment rate should rise to 11.2% in 1Q 2010 and remain above 10% until 1Q 2012. A slow decline may then ensue through 2013.