Moody’s Hopeful on Recovery, Notes Pent-Up Florida Demand

17 11 2010

The pace of the recovery in the nation is moderating and the lift spurred by nearly $800 billion in federal stimulus spending is fading, but there are several promising signs that growth will continue, including in Florida, a leading national fiscal analyst told reporters Friday morning.

Moody’s Analytics economist Chris Lafakis said the Federal Reserve will remain aggressive, with a quantitative easing plan that he equated to “basically flooding the global monetary system.” Lafakis predicted the strategy would lift asset prices, reduce corporate borrowing costs, and increase the willingness of consumers to spend.

Lafakis predicted substantial growth in Florida’s economy, mentioning that the Miami, Orlando and Tampa areas are expected to recover “quite significantly” due to a rebound in population growth and a willingness of more people to travel to Florida for vacations. “The story of pent-up demand is true in no place more so than Florida,” he said.

Nationally, corporate balance sheets are strong and business profits have “fully recovered from the recession,” he said, adding that businesses are in the position to hire more employees, but their level of willingness varies.

“It’s truly the case that profit growth leads job growth,” Lafakis told state government reporters gathered for the annual conference of the Association of Capitol Reporters and Editors.

Household liabilities in the United States have fallen by $900 billion since peaking two years ago and a shift to spending and addressing pent-up demand for purchasing “creates a lot of economic juice,” Lafakis said.

Arturo Perez, a fiscal affairs expert with the National Conference of State Legislatures, said states are collectively facing budget gaps that total half a trillion dollars in the coming years. He said state tax revenues bottomed out in fiscal 2010 and that tax collections were growing in 42 states in fiscal 2011, which began July 1. Perez described the prevailing sentiment across the states as “cautiou-mistic” with revenues rebounding from a depressed base.

The national economy, which had shed 700,000 to 800,000 jobs per month during the recession, has been adding jobs in recent months but not at the 150,000 per month rate that Lafakis said is needed to keep up with growth in the labor force and make a dent in the unemployment rate.

Over the past three months, he said, the national recovery has “downshifted to a more moderate pace.”

In the conference’s opening session Thursday, Lori Grange, deputy director of the Pew Center on the States, described research showing elected officials face a “huge deficit” in public trust in state government.

Grange said taxpayers favor reduced government spending over new taxes as a budget-balancing strategy and are breaking strongly against new state government debt and borrowing. The center plans to release a report on state debt trends in February, she said.

Grange said Illinois had gone on a “borrowing binge” that had led to the lowering of its bond rating and noted that voters in Washington rejected a $500 million request for capital spending to improve public schools.

The economic crisis is forcing state government officials to fundamentally rethink their operations, Grange said. She said high unemployment, expiring federal stimulus funds and increased demand for social programs had created “the perfect storm of lousy conditions and all of it’s in the face of significant budget gaps.”


Survey: Neat Neighborhoods Sell Homes

17 11 2010

When they’re considering moving to a particular neighborhood, most consumers feel they can trust their eyes to determine how safe the area might be.

According to a sampling of 1,492 visitors to, the safety of their new neighborhood is their most important consideration when they’re moving. The survey showed that 93 percent of consumers considered safety to be an “important” or “very important” concern.

When assessing the safety of a potential neighborhood, buyers increasingly relied on their eyes – 75 percent said they could determine how safe an area was by looking at the upkeep and front lawns of local homes. In addition, 74 percent said the area’s word-of-mouth reputation was an important factor.

“It’s interesting to see how home buyers determine neighborhood safety based on the neighborhood’s appearance and not as much based on police statistics or crime reports,” said chairman and founder Sharon Asher. “Our findings suggest that some home sellers who are struggling to generate interest may want to go the extra mile and help their neighbors with landscaping needs in order to create buyer interest.”

Some cities have earned a reputation for safety. The city of Boston ranked as the safest in the country for families with young children, according to a recent report by Underwriters Laboratories.


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