I've been very surprised over the past year how few articles I've seen on how bad things are in Florida. But the New York Times had an article over the weekend about Florida's troubles. Its economy was strongly correlated to the housing boom, so obviously its economy has been decimated by this recession. Things are worse there than even common statistics suggest.
I have probably been a little more sensitive to Florida's problems than the average Washington journalist, since it's my home state. I still visit often and have many friends and family that reside there. As a result, I've seen just how rough a time the state is having.
The Times article explains one of the reasons for Florida's problems -- its real estate market is atrocious:
It is a mess of immense volume: In the first six months of this year, 268,064 properties in Florida received a foreclosure filing, up nearly 42 percent from the first half of 2008, making it the second worst state in total foreclosures nationwide behind California. And for those convinced that recent, positive sales figures signal a brisk recovery, consider this: foreclosures outpaced sales of houses and condos in the same period (99,010) by a factor of nearly three. If every home in Boston received a foreclosure notice, the total would still be less than Florida's.
To make matters worse, Florida has long relied on real estate as a major component of its economy. The Times also notes:
Real estate and fast money, after all, have defined this peninsula since the '20s, when empty lots of swamp could be flipped for a profit between martinis. Florida has generally relied far more on growth than its counterparts: in 2004 and 2005, housing construction's share of the state economy was close to twice the national average, according to the Bureau of Economic and Business Research at the University of Florida.
Another factor affecting Florida has less to do directly with real estate, but more to do with a global economic contraction. During a recession, tourism tends to feel a lot of pain. That's pretty much Florida's only major industry besides real estate. One of the first discretionary costs people feel they can delay during a recession is a vacation. Those who do not cancel vacations altogether probably spend less than they would have. This effect has certainly been felt by Florida.
The state's problems aren't well-reflected based on its unemployment rate alone. According to the June monthly statistics (July isn't available until Friday), Florida's unemployment rate was at 10.6% -- only about 1% higher than the national average for the month. That's certainly bad, but only the 13th worst.
I think it is helpful if you go a little deeper into the unemployment numbers. The Bureau of Labor Statistics released an "Alternative Measures Of Labor Underutilization" report a week ago. For some odd reason, they average these percentages from the third quarter of 2008 through the second quarter of 2009. But they're interesting nonetheless. Two of these statistics are especially telling.
First, Florida is tied with Oregon for the 6th worst duration of unemployment. That means those unemployed in Florida are having a tougher time finding jobs than in most other states. Second, total unemployment including all marginally attached workers and those forced to work part time shows Florida as the 7th worst state. This is likely a better indicator of economic hardship than the better known unemployment statistic, since it shows the true percentage of workers who would like full-time employment, but can't obtain it. For Florida, that number was 15.6%.