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Florida’s Phenomenal Economy, Recession Realities & Opportunism - Top 3 Takeaways – July 6th, 2022
- It’s hard to overstate just how impressive Florida’s economy has been. By now you’ve known that it’s not just your personal economy which has taken a hit via the death of a thousand cuts with 41-year high inflation. It’s been the country as a whole. The US economy shrank by 1.6% in the first quarter of the year. And more recently, the Atlanta Federal Reserve – which keeps the most accurate economic projection tool in economic circles – is saying it was only worse last quarter with a decline of 2.1%. What this means is that on July 28th, the day the initial 2nd quarter economic estimate drops, you'll likely hear the confirmation that the US economy is in a recession. But while the US economy has been shrinking for the first half of the year, what has Florida’s economy been doing? Surging. Florida’s monthly revenue report, which I get it, just the name sounds boring – was anything but. The state’s latest monthly revenue report shows revenue nearly $742 million or 22%, above estimates. What’s more – net revenue to the state of Florida increased by 22.8% year-over-year. To put this in perspective, Florida is the third biggest state in the country, and our economy has most recently, stunningly outperformed the national average by an approximate 25%! Florida’s economy has been the best relative performer nationally over the past year but even that reality doesn’t do our state’s story justice. The pandemic highlighted the differences state policy has on our economies and our lives like nothing else before. It’s hard to overstate just how impressive Florida’s economy has been and hopefully, likely, continues to be which just may insulate us from...
- Recession realities. So, about that whole negative GDP growth and recession thing. While you’ve likely been well aware of the threat of a recession for quite some time, the economic wizards who are so often so wrong, are finally just coming around to that reality. Gone are the stories of how a recession won’t happen. Gone are the stories about how if one happens it’ll be next year. The reality is we’ve almost certainly been in a recession since January, but economists are only just figuring it out now. That’s why there was another rout in the stock market yesterday, that’s why the crypto market remains in a free fall. These are recession realities. It’s also what I work to keep you out ahead of. While I began to mention recession concerns in January, I first sounded the alarm February 3rd when I said this following January’s ADP Private Sector Jobs Report showing a loss of small business jobs: One month does not a trend make but I had concerns prior to this report. The impact of inflation was already a front-burner economic concern and I’d referenced the possibility of recessionary concerns multiple times over the past month. It’s simply not possible for the cost of life to continue to rise faster than wages without problems arising. The economy can’t continue down the path it's been going indefinitely. Now here’s the thing. On February 3rd the S&P 500 was 19% higher than it is today. On February 3rd bitcoin was 49% higher than it is today. When it comes to the economy a big part of what I work to do is to keep you ahead curve. Recession realities were present by the end of January, over five months later the so-called experts are just starting to figure it out. But here’s the better news...
- Inflation has (likely) peaked. Yesterday I mentioned this... Rent prices have peaked in South Florida. And actually, that’s the case for the housing market overall. On May 9th in my story – Has South Florida’s Real-Estate Market Peaked? I said this: Without hesitation I’m comfortable saying that there’s zero chance of double-digit appreciation for the average home continuing over the next year. And I’ll take another step as well. The housing boom of the past couple of years as we’ve known it begins to end this month in my estimation. In other words, we’re experiencing the end of the boom right now. Well, it’s not just that we’ve seen rent rates peak. Inflation overall appears to have as well. This takes me back to one of my sayings from the Great Recession of over a decade ago. The good thing about a bad economy is that stuff gets cheaper. Bidenflation’ caused the recession, but decreased demand due to it is in the process of making stuff cheaper. Gas prices, while still ridiculously high, are over twenty cents lower than a month ago and with the price of oil rapidly on the decline (most recently under $100 per barrel), more relief will be on the way. And with energy being the single biggest inflation catalyst – that will help a bit everywhere. But so will high inventories reported by most retailers and lessening consumer demand due to recession realities. But here’s the silver lining. If the recession turns out to be somewhat shallow (that’s currently unclear), and with Florida’s economy substantially bucking the national trend – there’s a possibility we’ll be somewhat insulated from the national recession while being able to take advantage of cheaper prices as a result of it. This summer is shaping up to potentially be a summer of opportunism for Floridians. From retail stores to investments – there's about to be the opportunity for better deals for those in a position to take advantage of them. If that’s you it’s a good time to have some power dry and to keep your eyes open for opportunity.