The GOP candidates have squared off in the Hawkeye, Granite, and Palmetto States. Over the past ten days, they crisscrossed the Sunshine State. But Florida earned another nickname during the recession.
The New Yorker called it the “Ponzi State” in a 2009 story on the state’s economy. The moniker, credited to University of South Florida professor Gary Mormino, references a pre-recession notion that things would be fine so long as the state continued to attract newcomers, no matter the surge in over-speculative buying and mortgage fraud.
They didn’t. And while the first four early-voting states in the race for the Republican nomination largely sidestepped the bursting of the housing bubble, Florida’s went ‘pop,’ bringing the rest of the state’s economy down with it.
GOP hopefuls have talked economy in other primary states, but Florida’s housing pain could lead to some campaign-trail disconnect with voters. The Republican candidates have largely adopted a hands-off position to housing problems and homeowner woes. Mitt Romney, for example, told an editorial board in Las Vegas – one of the states hardest hit by the housing crisis – that the foreclosure process should be allowed to “run its course and hit the bottom.”
Their position is in stark contrast to the Obama administration’s intervention, aimed at keeping mortgage credit flowing and helping underwater borrowers out of their financial mess. Those efforts have seen uneven success at best.
Florida’s loose mortgage standards made it one of the hardest-hit housing markets in the country. Last year, its foreclosure rate was the seventh highest in the nation. Nearly 182,000 properties received foreclosure notices, according to data firm RealtyTrac.
The foreclosure process, which averaged 224 days in Florida in 2007, lasted 806 days last year as the number of cases swelled – a much more significant increase in length than the rest of the nation experienced. Part of the reason is that Florida requires foreclosure cases to go through the courts, which became overburdened following the bursting of the housing bubble.
“Florida has been kind of the epicenter of dysfunction in the foreclosure industry in the past year,” said RealtyTrac Vice President Daren Blomquist. The sheer number of foreclosures to process caused the problems, he said. “You end up with some sloppy paperwork, some questionable practices.”
The devastation in Florida’s housing sector spread to its job market. Florida’s unemployment rate was 9.9 percent in December. An alternative measure of both under- and unemployment, the U-6 rate, averaged 17.6 percent in 2011.
“It’s sort of a perfect storm where you have both high housing prices and increasing unemployment because of our dependence on the housing sector,” said Anne Ray, Florida Housing Data Clearinghouse Manager at the Shimberg Center for Housing Studies at the University of Florida. The state’s construction sector was nearly halved by the recession.
Florida Gov. Rick Scott dubbed himself the “jobs governor” when he was campaigning in 2010, promising to create 700,000 jobs through his seven-year, seven-step plan. PolitiFact, a fact-checking website that is tracking Scott’s campaign promises, declared the initiative “stalled” in early January.
In fact, Florida is unlikely to approach the national unemployment rate, which is 8.5 percent, for a long time. The Institute for Economic Competitiveness at the University of Central Florida predicts that unemployment in Florida will remain above 9 percent until the fourth quarter of 2014.
As in South Carolina, Romney risks coming off as out-of-touch with the economic struggles of jobless Floridians. He enters the primary facing attacks from the left and the right over his high income and the low level of taxes he pays on it. While he joked, unsuccessfully, with Tampa voters in June that he is also unemployed, his level of comfort during the jobless period is far removed from that of from the average out-of-work Floridian.
But mention Florida to a resident of another state – or country – and visions of joblessness are less likely to be conjured up than those of Mickey Mouse, the Everglades, and the Kennedy Space Center. It’s not surprising President Obama decided to announce his latest initiative to boost tourism last week in front of Walt Disney World’s Cinderella Castle.
Not only are these sites iconic, they form the backbone of Florida’s economy. Tourism was 9.3 percent of the Sunshine State’s gross domestic product and employed 974,700 of the state’s residents in 2010. To put that in perspective, the U.S. travel and tourism industry contributed 2.7 percent of the country’s GDP and 7.5 million jobs in the same year.
The sector weathered the recession relatively well. Although tourism lost 32,300 jobs and spending dipped from $65.2 billion in 2008 to $62.7 billion in 2010, the volume of visitors to Florida remained pretty steady through the downturn. The visitors who were there spent less, but they came nonetheless, said Chris Thompson, CEO of Visit Florida, the state’s official consumer website.