As National Growth Slows Miami Boomsat Least For Now
Written by Michael Lewis on February 2, 2006
By Michael Lewis
When I was being lured south in the mid-1970s, my Orlando employer assured me that though the US economy was dragging, we’d suffer no impact because special advantages protected Florida.
My first week, he told me to fire 10 of our 260 news people because Florida’s economy was in decline.
That cautionary tale sets the stage for what follows: facts and analyses that appear to show how different Miami’s economy is from the rest of the US.
For if you didn’t know, via Thomas Friedman, that "The World is Flat," you might view Miami’s economy as existing in a sphere apart.
Following Friday’s reports that gross domestic product had slowed to 1.1% annual growth in the fourth quarter, analysts looked at a national slowdown. The big culprit, it seems, is the dive in automobile sales.
But luxury-car dealers in Miami cite brisk sales. If we see few of Detroit’s newest autos cruising Miami streets, high-priced foreign models keep rolling out of showrooms in profusion. And our late-year economic problems bore names like Wilma and Katrina rather than Ford and GM.
Whether hurricane-related slowdowns will continue in 2006 will depend on global fear of a future, rather than past, menace to Florida.
Economists see slowing growth tied to a widening trade deficit. But whether US trade deficits grow or shrink, ever-growing shipments through the Port of Miami keep fueling our local economy.
Friday’s report found creeping inflation. In Miami-Dade, 2005’s consumer price rise was 4.7%, vastly outpacing the nation’s 3.4%.
Rising housing prices push that index up, and those prices have soared here much faster than nationally. But that housing component is misleading, falsely assuming that a homeowner who stays put pays extra for housing when market values rise.
A big national drag is a housing market expected to slide as interest rates climb. But whether it’s to foreign buyers or local speculators or both, Miami continues to sell high-priced housing that has yet to be built – and some of which may never be. Even high-rise condos that sit vacant for years continue to trade.
Baby Boomers moving South will actually live in what they buy, however, and that flow here continues, good times or bad. The residential influx from Latin America, too, will go on as governments there veer leftward.
Nationally, year-end unemployment of 4.9% made Miami – which has long had higher jobless rates than the US as a whole – look great at 3.7%, lowest since at least 1995.
The nation added 300,000 jobs in December, bringing 12-month growth to 2.02 million, or 1.4%, in a workforce of 142.8 million. In the same period, jobs in Miami-Dade grew 3.6% to more than 1.09 million.
Where might we worry about jobs here?
Miami’s biggest sector, trade, transportation and utilities, which employs 258,900 – more than a quarter of our jobs – had no growth at all in the past year.
Manufacturing, long in decline here (see again Mr. Friedman’s book), lost 3% more jobs in 2005 and is down to 49,100 from 74,100 just 10 years ago.
Also of concern is Miami’s 1.7% decline in the information sector, to 28,100 jobs. That vital sector includes content, distribution and manufacture in television, faxes, cell phones and Internet as well as older information forms.
The largest 2005 percentage growth, as we reported last week, was in leisure and hospitality jobs, up 3,900 jobs, 3.9%, to 104,900. Almost as large in absolute growth was 3,300 professional- and business-services jobs to 165,800, up 2%.
Another big rise in 2005 was in education and health services, up 2.1%, 2,900 jobs, to 139,400. And financial activities added 1,100 jobs to 70,200, most ever, overcoming five years of absolute decline at the end of the 1990s.
Factor in 3.4% more jobs in other services and it’s clear that Miami’s services future is bright – again, bearing in mind Mr. Friedman’s cautionary tales of offshoring. If they ever learn in India or China how to make hotel beds via satellite, we’re dead.
No mention here of construction jobs. Despite plans filed for more than 93,000 housing units in Miami alone and some 140,000 countywide, construction employment is the same as a year ago.
Whether this means developers can’t find workers or that building work can trail sales by years or that the pace of construction is deliberately slowed, the US Bureau of Labor Statistics can find no more construction workers on the job now even though the pace of projects appeared to speed up in 2005.
On Friday, the Bureau of Labor Statistics is to report on national job growth for January. Local statistics for comparison will lag them.
But to this point, South Florida continues to outperform the nation. Thank our special advantages like climate, global ties, rapid growth and geography.
But remember 1974 in Orlando. It was our special advantages there like climate, rapid growth and geography that were going to insure we’d keep booming while the national economy declined.
That was just before the layoffs.