|
|
 |
|
February 9, 2010 |
|
|
|
|
| |
|
|
| November 27, 2009 |
By: Mike Seemuth |
|
ome South Florida CEOs and other executives are playing the role of chief economist as 2010 approaches. But their diverse forecasts may underscore broad uncertainty about the economy’s direction next year.
“The Florida economy is sending mixed messages,” Armando Pimental, chief financial officer of FPL Group, told stock analysts in a conference call to discuss the company’s third-quarter results. “Some of the metrics we follow appear to be moderating … but that doesn’t mean they’re getting better, per se,” he said. “Rather, those metrics are just not as bad as they have been before.”
George Feldenkreis, the chairman and CEO of Miami-based apparel producer Perry Ellis International, says the worst is over.
“We believe that the economy has hit bottom,” Feldenkreis said last week on the company’s third-quarter conference call. “I am confident that even with the current economic conditions, we. … expect our revenues in the next 12 months to be higher than in the last 12 months.”
But among 20 locally based public companies that recently reported third-quarter earnings, 12 offered no guidance to investors in the form of future earnings estimates.
For example, one of the 12, Fort Lauderdale-based staffing agency Spherion explained its stance in a company statement summarizing summarized its disappointing third-quarter results by saying: “The current economic environment and the impact of the holiday season make it difficult to predict how revenues will trend.”
Other major public companies in South Florida that avoided coupling their third-quarter financial results with forecasts of future earnings were AutoNation, Office Depot and Ryder System.
But even non-prognosticating CEOs are compelled to watch and wonder where the economy is headed.
Among other economic indicators he follows, Ryder chairman and CEO Gregory Swienton tracks the mileage that accumulates on commercial customers’ leased vehicles.
On a year-over-year basis, “when that turns positive, that’s a sign that customers are filling their leased trucks,” Swienton said last week, in a public address at a conference sponsored by investment firm Stephens Inc.
But “unfortunately, I don’t think our customers are yet done with downsizing their fleets,” he said.
“The best information we have is not from an economist but from what our customers are doing, and they have not shown a level of confidence that their businesses have turned enough, or that the economy has turned enough,” so many require fewer vehicles.
“We’re going to face that for a few quarters ahead yet.”
Economist: Florida’s recovery tied to credit access
Restricted access to credit could make Florida’s recovery from the recession terribly slow by historical standards.
“Historically, I think this is one of our slowest recoveries,” said Rebecca Rust, chief economist of the state Agency for Workforce Innovation, speaking last week on a conference call with reporters.
“Even though we’ve had housing downturns before, the main difference here is that we still do have tight credit conditions, and we haven’t had that in trying to pull off a recovery before.”
That’s why Florida’s economy could undergo “much more lengthy recovery period than we’ve seen in the past,” Rust said.
A multiyear job drought may be under way. The state government officially has forecast that Florida’s unemployment rate, 11.2 percent in October, gradually will fall to the 6 percent range — but not before 2019. Before the national recession began in late 2007, Florida was a national leader among the 50 states in economic growth, and as a result, Florida’s economy probably has “further to fall,” Rust said.
Jobs in Florida are disappearing at a slower rate now than at the beginning of the year. A surge in demand for temporary workers could signal an economic upturn. But demand for Florida temps remains flat.
“Temporary employment has started to increase at the national level … Before they hire additional workers, employers are going to extend the hours of their existing staff, and we’ve seen that in the manufacturing sector,” Rust said.
But “we have not seen employment growth in that industry at the state level.”
An increase in home sales is an encouraging sign of possible stabilization in the residential real estate market. But unrelenting defaults on mortgage loans could slow the pace of economic recovery.
“Late payments are up in the state and nationwide,” Rust said. “We need to watch the foreclosure data; there could be an increase down the road.”
On the other hand, contradictory trends such as increases in home sales and foreclosure filings may signal the start of something good. “At the bottom of a recession, we will have mixed messages,” Rust said. “A year ago we were concerned about, ‘Are we going into a depression?’ And in the current time period, we are concerned about, ‘Is the recession over? Has the recovery started?’ And we have a mixed batch of economic data, some showing improvement; some still showing decline.”
Further economic weakness could make gaming riskier
The Seminole Tribe of Florida’s gaming business may be a good bet for some investors, but a credit rating agency predicts the state’s economy will remain a loser for a while.
“The near-term outlook for the operating trend in Florida’s regional gaming markets is poor on the basis of depressed local economic conditions,” New York-based Fitch Ratings reported on Monday.
The Seminole gaming business in Broward County and around the state “will face significant operational headwinds in 2010” but is liquid enough to withstand hard times, Fitch found.
In affirming its BBB and –BBB ratings on various classes of Seminole debt, Fitch reported that “the primary concern is the impact of the economic recession on the consumer in Florida’s regional gaming markets.
The rapid spread of slot machines to state-regulated, pari-mutuel facilities is another factor weighing on Fitch’s rating of Seminole debt.
“The introduction of commercial competition in South Florida has resulted in a more than doubling of slot supply in that market since 2006,” the credit rating agency reported.
In October, for example, Flagler Dog Track in Miami opened its Magic City Casino, with 700 slot machines. And Calder Race Course in northern Miami-Dade County “is expected to open a 1,600-slot casino in the first quarter of 2010,” according to Fitch.
The Seminoles’ transition to Class III slot machines and its introduction of blackjack and baccarat have offset the new slot competition.
Further, the tribe’s gaming business may be liquid enough to weather an extended economic downturn.
“Near-term uses of cash are minimal; debt maturities are modest until 2014,” when a term loan matures, “and there is presently no capital project development risk,” Fitch reported.
But the tribe depends heavily on local patronage, and its gaming business could get riskier if the local economy gets weaker.
“The confluence of an extremely severe collapse in the state’s housing markets and weakness in tourism trends has heavily impacted the state’s economy,” Fitch reported.
While employment growth begins to resume in other parts of the nation, “recovery in many of Florida’s regional economies will be forestalled by the continued drag of struggling residential housing markets,” Fitch said, “and employment and income trends will likely take longer to return to their pre-recession peak.”
Preview
CHAIN STORE SALES: The International Council of Shopping Centers and investment firm Goldman Sachs on Tuesday will release their weekly index of U.S. retail sales at chain stores. The index for the week ended Nov. 14 rose 2.4 percent compared to the same week last year.
PENDING HOME SALES: The National Association of Realtors will report its October index of pending home sales on Tuesday. In its eighth consecutive increase, the index rose 6.1 percent in September from the August level.
PRIVATE EMPLOYMENT: Payroll processing firm ADP will release its October estimate of the nation’s private-sector employment on Wednesday. The estimated number of jobs fell by 245,000 in September from the August level, the smallest decline since July 2008.
LABOR PRODUCTIVITY: The federal Bureau of Labor Statistics will release its revised estimate of third-quarter labor productivity on Thursday. The agency reported Nov. 5 in its preliminary estimate that productivity in the non-farm business sector surged 9.5 percent in the third quarter, compared with the second quarter.
U.S. UNEMPLOYMENT: The Bureau of Labor Statistics will report the nation’s November unemployment rate on Dec. 4. The jobless rate rose to 10.2 percent in October from 9.8 percent in the previous month of September.
|
Search the archive for more stories.
|
|
|
 |
|
lawjobs Featured Ad
Foreclosure Litigation Attorney Boca Raton office of expanding firm seeks an Experienced Litigator w/ min. 3 yrs. exp. Excellent salary and benefits package.
E-mail scleary@
logs.com |
|
|
|
|
|
|
