May 15, 2020 (Courtesy of The Jacksonville Daily Record)
Wells Fargo Senior Economist Mark Vitner said the region’s economy “had really hits its stride” before COVID-19 shutdown.
Last week brought two economic reports that shed light on the state of the Jacksonville area economy.
One was the monthly report showing continued low unemployment in February, indicating how strong the Northeast Florida economy has been – up until now.
The other more timely report on weekly claims for unemployment insurance showed a surge in Florida, indicating how everything changed in March.
“The one thing you can glean from the data is that Florida’s economy was growing full throttle prior to when the COVID-19 pandemic intensified,” Wells Fargo Senior Economist Mark Vitner said by email. “Then most activity came to a sudden stop.”
The unemployment rate in the Jacksonville metropolitan area had been at record levels at or slightly below 3% for months, with strong gains in jobs.
“I was in Jacksonville several times earlier this year and the region’s economy had really hit its stride,” said Vitner.
“Jacksonville’s Southside and Beaches accounted for a good part of that growth. St. Johns County has consistently ranked as one of the fastest-growing areas of the country,” he said.
Vitner works out of Charlotte but previously was an economist at Barnett Banks Inc. in Jacksonville, so he knows Northeast Florida well. He said the area has advantages that will help it recover from the short-term slowdown.
“Housing is likely to be a big part of the solution in this recovery, rather than being the center of the storm of the last recession,” he said.
“The availability of relatively affordable housing is a key competitive advantage for Jacksonville and will continue to be so after we move past the current recession.”
The latest data from the Northeast Florida Association of Realtors showed a strong market for home sales in the region.
The number of home sales in February was 4.1% higher than February 2019, and the median sales price was 6.6% higher.
Only a small bit of economic data is available for March, when the impact of virus-related closings hit businesses. The U.S. Labor Department last week said initial unemployment insurance claims in Florida reached 74,021 for the week ended March 21, more than 10 times the previous week.
Nationally, new unemployment claims jumped to 3.283 million in that week, shattering the previous record of 695,000 during the 1982 recession, according to PNC Financial Services economists.
“The massive increase in claims for the week ending March 21 is the first piece of hard evidence that COVID-19, and the public health measures taken to contain it, are wreaking unprecedented havoc on the U.S. labor market,” the economists said in an outlook report.
“Claims were near a 5-decade low just two weeks ago, at 211,000,” they said.
After a record expansion lasting more than 10 years, the U.S. economy fell into a recession in March, the analysts said.
Abbey Omodunbi, PNC economist for Florida, said the state will feel the impact.
“Restrictions on movement because of the COVID-19 outbreak will be a huge negative for Florida’s economy. Consumer-facing industries such as leisure and hospitality are particularly at risk during this viral recession as consumer spending will drop until the COVID-19 outbreak is contained,” he said by email.
Vitner said April will be a bad month for the economy but he remains optimistic for the long term.
“Florida’s economy tends to bounce back from recessions fairly quickly as long as real estate has not gotten grossly overbuilt. The banks have healthy balance sheets and monetary and fiscal stimulus has been implemented unusually rapidly and is well targeted,” he said.
“We will get through this,” he said.