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2004: Best Year in 20
Prognosticators say most economic indicators are pointing up. Good times are predicted.
By David R. Corder
Associate Editor
What a difference a year makes for Stephen Knopik. The president of Bealls Inc. speaks confidently these days about the Bradenton-based retailer's corporate expansion plans as continued improvement in the economic indicators hint at a turnaround in the soft U.S. economy.
"We're planning for some same-store advancement in both Bealls and Bealls Outlets," says Knopik, who manages the Sarasota-Manatee market's largest privately owned company. "To that you would add new growth in both chains. In addition, we're experimenting with two new concepts. The first is called Coastal Home by Bealls, a home decor specialty store. We opened three of those, and we're very excited about the initial results. The second is Bealls Home Outlet, a more value-oriented home decor and accessories store."
This market leader shares much in common with his corporate peers throughout the Sarasota-Manatee market. While decidedly optimistic about the near-term economic outlook, most of them still qualify their comments. They recall all too vividly just how quickly the bubble burst on one of the greatest periods of economic prosperity in the history of the U.S. economy and how the fall negatively impacted their businesses over the past few years.
"It's difficult to predict the future, for crying out loud," says Knopik, who expects from 5% to 10% growth next year in Bealls' current national work force of about 9,845. "There are a lot of variables."
Still, those variables appear encouraging.
Positive indicators
Local market leaders referred to recent gains in the Dow Jones Industrial Index as part of the cause for their optimism. The composite index broke the 10000-point mark earlier this month on a steady climb from the first quarter of this year. The Nasdaq Composite, too, posted similar gains. It now hovers at just below the 2000-point mark. Those gains bode well for local businesses hungry for the public and private investment dollars that fled over the past two years to the real estate markets.
Such movement should translate into positive gains for Sarasota-based FCCI Insurance Group, says G.W. Jacobs, the firm's president and chief executive officer. Of all businesses in the Sarasota-Manatee market, FCCI probably experienced the biggest impact last year because of the soft economy.
In 2002, the workers' compensation insurance firm reported $514 million in policy premiums. The amount written this year dropped to about $460 million. Next year, the insurer expects a slight turnaround, with premiums climbing to about $480 million.
"The insurance industry still hasn't caught up," says Jacobs, who oversees the third-largest privately owned company in the Sarasota-Manatee market. "We're still struggling. Our revenue declined because of the Florida workers' comp market, our primary business market here.
"If there is a pessimistic group, it's my peers in the insurance industry," he adds. "But the rest of us are taking comfort from what we're seeing. I don't know how many more positive indicators we can get before people start to realize we're in a growth economy."
For the third consecutive month, the Consumer Confidence Index published by The Conference Board posted an increase in the national monthly survey. In November, the survey reported one of its biggest recent monthly gains - a 10-point increase. Now the nonprofit economic research group forecasts a 5.7% increase in the national gross domestic product, "making 2004 the best year economically in the last 20 years."
Any increase in buyer confidence is good news for consumer-hungry business leaders such as Vernon Buchanan, president of Sarasota-based Buchanan Automotive Holdings Inc.
"When we start seeing more positive reports about consumer confidence, and you just see a lot more about the businesses in the country increasing their spending, that bodes well," says Buchanan, the chief executive of the second-largest privately owned company in the Sarasota-Manatee market. "I'm optimistic. I think (interest) rates are historically low and will trend up some, but I don't think a lot the next year - maybe a half a point to a point. So we're anticipating about a 10% to 15% uptick (in sales) in the Sarasota-Manatee market."
Definite gains
Local economic indicators point toward definite gains in the Sarasota-Manatee economy.
Using econometric models that rely heavily on mathematical extrapolation, for instance, the Bureau of Economic and Business Research (BEBR) at the University of Florida expects personal income to grow next year by 8% in Manatee County and 7.9% in Sarasota County.
The projected rise in personal income partially accounts for why John P. O'Neill, president of Sarasota-based Century Bank FSB, anticipates continued increases in the bank's business lines.
"Our delinquencies and loan write-offs are very low," says O'Neill, who operates the second-largest bank in the Sarasota-Manatee market. "Between that and brisk loan volumes, our thinking is we have a very strong economy here. Our current plan for the year calls for volumes equal to or greater than what we've experienced in the three areas of our portfolio - commercial, consumer and residential.
"We're expecting less in the way of refinances, but we've positioned the company in the area of purchase-money mortgages," he adds. "In the commercial area, we've stepped up that area significantly. We're having a very strong year in 2003, and we expect that momentum to follow in '04."
So far this year, the number of jobs created in Sarasota and Manatee outpaced the BEBR forecast. The economic research group projected increases of 3% increase in Manatee and 2.8% in Sarasota. However, the state Agency for Workforce Innovation reports in its preliminary October survey that the number of jobs increased by about 4% in each county, compared with the survey taken the same month a year ago.
Unemployment in the Sarasota-Manatee market still remains well below either the state or national average. The October unemployment rate - the most recent data available - dropped to 3.7% from 4.4% in Manatee and to 3.4% from 3.6% in Sarasota. In comparison, the state's unemployment rate averaged 4.9% - down from 5.5% a year ago. The national rate averaged 5.6%, an increase of three tenths of a percent over the same month a year ago.
However, the improvement in the local jobless rates doesn't necessarily signal a wave of new hiring for local employers.
"We've found over the past couple of years we can operate a lot more efficiently with leaner staffing," says Stephen Mehas, general manager of the Sarasota Hyatt. "We don't want to be too quick to add back positions just for the sake of optimism. We need to see results first."
That's not to say Mehas, who manages the largest hotel in the two counties, lacks optimism. "We're seeing improvement over this year, a least for the first half of (2004) so far," he says. "We're still optimistic the summer months and the second half of the year will follow suit, but it hasn't developed yet.
"We're seeing a return of some of our group-related business, small meetings and conventions," he says. "They are much more obvious than our traditional transient business traveler. They're still a little slower, but all the national indicators say it's going to happen. I just haven't seen it yet."
Continued growth
Despite the softness in some sectors of the economy, the Sarasota-Manatee real estate market continues to thrive.
For the nine months ended Sept. 30, Sarasota-based "The Construction Guide" reported an 18% increase to 10,967 in the total number of building permits issued in both counties. It also reported a 13% increase in total construction value - to slightly more than $1.55 billion. Single-family home construction accounted for about 54.2% of the total permits issued.
Unincorporated Manatee County led all areas in the total number of permits issued, 4,167, a 14% increase over the same period last year. Unincorporated Sarasota County issued 3,478 permits, a 9% increase. But one of the fastest growing areas in the market remains the city of North Port, which issued 2,031 permits. That's a 49% increase over the same period last year.
Much of the demand for housing continues to come from historic migration patterns from the North and Midwest.
The latest statistics from BEBR forecast a 2.2% increase next year to 290,500 in the number of total permanent Manatee residents. The research group forecasts a 2% increase to 355,100 in total permanent Sarasota residents.
"The inflow of population will continue to buy new or existing homes," says Century Bank's O'Neill. "Current residents of this market will be moving and buying larger homes. We do anticipate refinances will fall off, so we're making a concerted effort to target people who are purchasing homes.
"(Interest) rates will rise on the long end in the near term," O'Neill adds. "We also expect short-term rates, the Fed Funds, to begin rising in the latter half of the year. Of course, the last two years we've had the same forecast. Maybe we'll get it right the third time."
Short-term outlook
Manatee County forecast
Year20012002200320042005
Population270,771276,689283,270290,016296,889
Population change6,7695,9186,5816,7466,873
Employment113,717112,573121,786129,583137,970
Employment change(6,595)(1,144)9,2137,7978,387
Income (billions)$8.7$9.2$10.0$10.9$11.6
Jobless rate3.1%3.8%4.5%4.7%3.7%
Total housing starts5,0756,4144,2244,6694,922
Single-family3,2973,9703,2143,6823,877
Multifamily1,7782,4441,0119871,045
Overnight tourists1,236,5361,296,2951,315,0031,354,7321,393,123
SARASOTa County forecast
Year20012002200320042005
Population334,023341,625349,124356,774365,091
Population change8,0667,6027,4997,6508,318
Employment146,866146,659148,858154,889160,973
Employment change19,839(207)2,1996,0306,085
Income (billions)$12.7$12.6$13.9$14.6$15.0
Jobless rate2.82.93.83.93.4
Total housing starts4,9655,2784,5314,3004,978
Single-family3,8614,2693,9333,7574,004
Multifamily1,1041,009597543974
Overnight tourists1,926,7931,906,6481,961,0902,029,3412,095,294
Source: Fishkind & Associates Inc., Orlando
Total County Population: April 1, 1970 - 2025County197019801990200020042010201520202025
Broward620,1021,018,2571,255,5311,623,0181,720,6061,910,1422,057,7122,206,9722,323,138
Collier38,03885,971152,099251,377300,437357,225406,899457,724497,782
Duval528,866571,003672,971778,879834,540891,034941,468991,9961,031,203
Hernando17,00844,469101,115130,802142,840157,876171,153184,476194,827
Hillsborough490,266646,939834,054998,9481,093,8661,198,0541,287,0541,375,9441,444,638
Lee105,217205,266335,113440,888505,578565,703621,573678,353722,822
Manatee97,117148,445211,707264,002289,673318,344343,404368,724388,439
Miami-Dade1,267,7931,625,5091,937,1942,253,3622,373,2242,548,1772,691,8482,836,6722,949,087
Orange344,312470,865677,491896,3441,002,8461,136,8861,248,4281,361,7281,450,347
Palm Beach348,754576,758863,5031,131,1841,233,2021,378,3311,498,2891,619,9451,714,935
Pasco75,951193,661281,131344,765380,080412,510443,661475,096499,551
Pinellas522,326728,531851,659921,482945,543982,1991,011,5831,041,2091,064,196
Polk227,221321,652405,382483,924518,531562,750599,555636,650665,444
Sarasota120,413202,251277,776325,957352,650378,942403,143427,411446,238
Florida6,789,4379,746,96112,938,07115,982,38717,312,57018,978,66620,387,03121,807,19222,913,899
Source: Demographic Estimating Conference Database, updated 9/2003.
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