According to several key economic indicators, Graduate students in an Applied Economics class at Hodges University say that our region is currently suffering from a recession. The report entailed researching and tracking the economic indicators which have a significant impact on the area economy. Each indicator was analyzed for its relevance to the local economy and the validity of the data. The report focused on different aspects of the local economy, including foreclosures, Housing Price Index (HPI), building permits, and total private employment and unemployment rates.
Recession indicators in the report included:
Foreclosures in Lee and Collier increased dramatically from 2005 to 2007; from 729 for the first six months in 2005 to 4313 foreclosures for the first six months in 2007 (these foreclosure statistics represent Lee County only). Lee County led Collier County in this category, but both are lower than the current state and national average.
Unemployment figures for Southwest Florida are also on the rise, recently surpassing both the national and state averages. A more telling indicator is the number of employment ads in the leading newspapers for Lee and Collier County. They reflect a major downturn in the number of jobs available. Adjusted figures for the number of employment ads are running 50 % less for the first quarter of 2007 as opposed to the first quarter of 2006.
Building Permits: Residential and commercial construction during the period from 2004 and 2005 exceeded the demand; when those properties were finished and brought to the market in 2006 and 2007 the project demand did not exist as projected.
Housing Price Index (HPI) for Lee and Collier County has decreased in 2007 as compared to 2005 and 2006. In some cases, the price for single family homes and single family housing units has been reduced as much as 20%.
There is some good news in this forecast. Although there has been an increase in the foreclosure rate as well as a reduction in new housing starts, the primary response to a lower HPI is that lower home prices attract new home buyers who previously were priced out of the market. Also, by definition, recessions are usually short-lived. Combined with hopes for a prosperous “season” in 2008, there could be slow but steady upturns in our area’s economic future.
On a national level, Countrywide Financial CEO Angelo Mozilo said recently that the ongoing housing slump will likely push the U.S. economy into recession.
To view the complete report, log onto www.hodges.edu and click on the “News & Events” link.