South Florida is catching a tailwind from a stronger U.S. economy, according to PNC Financial Services Group’s third quarter Southeast Market Outlook. The report offered an optimistic forecast of the region’s progress into 2016, predicting lowered unemployment rates, less foreclosed properties and more tourism.
“Southeast Florida will be a strong performer in the quarter ahead,” said Florida PNC Economist Mekael Teshome told the South Florida Business Journal. “Our outlook has improved and the region’s continued gains are driven by consumer spending, housing, and migration.”
Notable predictions from the report:
Southeast Florida’s economy will perform above average for the rest of 2015 and 2016. From jobs, to housing, to income, to construction, everything seems to be on the rise in Florida. Although the region’s job growth is decelerating slightly to below three percent in 2015 from 3.3 in 2014, some of the main factors driving economic development in the tri-county area are strong population growth, well-developed infrastructure and deep international linkages, the report said.
Rising disposable income will boost tourism. Strong economic growth nationwide is fueling consumer confidence everywhere, and therefore bolstering tourism and spending in the tri-county area. But the concentration of jobs in tourism, finance, transportation and trade-related industries will make the area’s economy more susceptible to downturns in national and global business cycles, the report said. All three South Florida counties touted record high tourism numbers in 2014 and their goals are more lofty each year.
Large inventory of foreclosed properties will diminish. But home prices will “come back down to earth” as the market balances. Home prices have risen by nearly 46 percent since they bottomed late 2011, Case-Schiller index says, and affluent foreign buyers and low mortgage rates are helping to push sales up. But the PNC report noted that the tri-county homeownership rate — which was above the national average before the recession — is now below it, as many residents become renters rather than home buyers. The region has one of the largest inventories of foreclosed homes in the nation and PNC predicts they’ll be steadily absorbed over time, rather than flood the market because of lengthy foreclosure processes. What may stymie that, Teshome said, are rising interest rates, which expected to go up by December.
Income will continue to grow slowly. PNC blames a disproportionate number of low-wage jobs being created in retail, leisure and hospitality sectors for slow income growth in the region. While South Florida’s income growth, like its job growth, is picking up, consumer purchasing power is also weaker in the tri-county area than it is in most places across the nation. The cost of living in South Florida is eight percent higher than the U.S. average, and the per capita income ranges from 10 percent below the national average in Greater Miami and as high as 29 percent above the national average in Palm Beach County, the report said.
South Florida’s jobless rate will be slow to decline. PNC predicts that the unemployment in the tri-county area will decline to 5 percent by mid-2016 from 5.7 percent mid-2017. Economic recovery will encourage workers to enter the labor force to search for employment, the report said.