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Highlands Today

ECONOMIST: Consumer Confidence Is Key To Better Days

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By Bill Rettew Jr. | Highlands Today

Published: June 18, 2008

LAKE PLACID — The bad news is that county residents are facing an economic downturn or recession, said a local economist, but the good news, it's only temporary, and will not last forever.

William Pittenger, senior vice president and chief real estate economist, risk advisor with Seacoast National Bank, predicted an eventual economic upturn from a recession, which he said probably began in late 2007.

Pittenger addressed more than 100 Greater Lake Placid Chamber members at last week's meeting at the Elks Club.

"Rather than half empty, the glass is half full," said Pittenger. "We should be half way through. The economy is growing at a very modest rate, but it is growing."

While the gross domestic product, consumer spending and business investment play major roles as economic drivers and affect real estate, it is employment, unemployment and rate of job creation, which act as the best predictors.

"Watch for the national unemployment rate to reach 6 percent, and in Florida for it to flirt with 6 percent before stabilization," said Pittenger. "This will be a jobless recovery. Employment is a leading indicator going down, but a lagging indicator going up, as employers are slow to rehire."

The unemployment rate in Highlands County jumped from 3.5 percent during March of 2007, to 5 percent. While 40,076 are employed in the county, 2,115 are unemployed.

Pittenger noted that construction accounted for 63 percent of Florida job losses, or 84,000 in a year's time. The overall Florida number of jobs for April 2008 decreased by 64,500.

"While the unemployment rate has remained at 6 percent, it is not as bad as it has been in past recessions and not as bad as it can be," said Pittenger.

The economist pointed to the number of temporary workers as an excellent economic barometer.
"Temporary workers are first to be let go, and the first to be rehired, as employers test the waters."

Consumer confidence is at the lowest it has be in 28 years and consumers are driving the downturn, said Pittenger.

"Today's problem appears skewed toward psychological rather then economic," said Pittenger.
In 1984, Americans saved 10 percent of their income, 1994 it was 5 percent and today it is slightly negative (Americans in general currently spend more than they earn.)

Several Realtors listened to the presentation, including Debbie McCollough of Century 21 Compton Realty.

"We're struggling with consumer confidence, but it's a great time to buy because you have so much more to choose from – inventory is high and prices are better," said McCollough.

Pittenger addressed the Highlands County population of 96,321 which is growing 1.4 percent per year. That rate has been steady since 2000 . County growth slowed - from 1990 to 2000 – the average of growth was 2.1 percent annually.

Housing in the Heartland slowed, but not like it did on Florida's coasts and cities.

"Highlands County's problem appears more psychological than economic," said Pittenger. "Price run up in 2004-2006 was much less than Florida's urban counties. Decline since mid-2006 has therefore not been as great."

Residents will know that the housing market has hit "rock bottom" when both prices stop falling and sales volume increases, said Pittenger.

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