The South Florida economy experiences 'a different kind of surge' while sentiment wanes
The unemployment rate has plunged while the inflation rate has soared, hurting consumer confidence.
The unemployment rate in South Florida is lower now than the month COVID-19 began to take hold of the economy. But that doesn’t mean the South Florida job market is back to its pre-virus state.
Two years after the pandemic began, it is a much different economy, and a much different pandemic.
While unemployment rate in South Florida has fallen to three percent, there are 60,000 fewer jobs than compared to the month before the pandemic, and there are more than 30,000 fewer people who are part of the job market.
There’s inflation, which has shot up, especially for housing, gasoline and food.
And then there’s the virus itself and the tools to manage it. It has been about a year since vaccines became widely available. There are several new treatments for those catching the disease. And there is the ever-evolving germ itself.
"Maybe the psyche is worse than the actual," said Howard Frank, Director of FIU Pérez Metropolitan Center.
Despite the sharp rebound of economic activity and employment, Florida consumers are less optimistic this spring compared to a year ago. That's when the first doses of COVID-19 vaccines became available and Florida became one of the first states to lift most pandemic-induced economic restrictions.
"I think psychologically the high gas prices and high food prices must be leaving a lot of people feeling not so great," said Frank.
The infection and unemployment data have dropped considerably. Fewer people are catching the virus, and there are a lot fewer serious cases.
"We're doing well right on most of the metrics," said Dr. Zinzi Bailey, a social epidemiologist with the University of Miami. "We are living in this really positive valley because we went through omicron and we went through delta. We've gone through these progressive surges that have touched almost every family. We can now have a kind of measure of security for a period of time."
About 1,000 people a day in Florida tested positive for COVID-19 over the past month. Just three months ago, it was about 50,000 people a day. That was the height of the omicron surge.
"In this last spring break season, we've had different kinds of surges," Bailey said. "The surges of tourists and people who are coming back to our hospitality, food and service sectors. I think those things are bouncing back."
The hospitality industry sees this. In late March, revenue per available hotel room in Miami-Dade County is up about 50 percent from a year ago, according to data from the Greater Miami Convention and Visitors Bureau. It's the same story across South Florida.
In February, hotels across the region hit their highest occupancy levels of the pandemic. At least 90 percent of available rooms in the Keys, Fort Lauderdale, Miami and Palm Beach were filled, according to commercial real estate data firm CoStar.
Hotels in the Keys have the highest occupancy rate in the nation, which helps explain why Monroe County has the lowest unemployment in the state — two percent.
Inflation rates, not infection rates
Anyone younger than 40 years old has never lived or worked in an American economy that is experiencing inflation as high as it is now. You have to go back to 1982 before prices on all sorts of stuff were rising as fast as they are now.
Yes, gasoline prices have shot up because of the Russian war in Ukraine, but prices of new and used cars, furniture and food were moving higher well before that violence started.
COVID-19 and actions to save the economy from collapse have contributed to fast-rising prices. The virus slowed down or shut down production of some things, affecting supply, while COVID stimulus money and savings stoked demand.
So even as employment has bounced back and wages are up more than five percent, that’s not keeping pace with prices up almost eight percent.
The impact of inflation is not even. Lower earning households feel it faster and deeper than others. The households in the bottom 20 percent of income earnings spent about a third of their take-home pay on energy and food — a far greater share than any other group.
"Those folks are going to be pinched," Frank said. "For 50 cents or $1 an hour (more), people will shift jobs."
"I think people are still thinking about what risks they might be encountering (at work)," said Bailey. "They're thinking about what they might be exposed to as they're going about their work, thinking about whether their employers are protecting them or have measures to protect them. They're not willing to take as many risks for the price that they would have otherwise."
Tens of thousands of people working in South Florida have voluntarily quit their jobs over the past year. It's about one out of every 33 employees. This does not include people retiring or transferred out of state. It is seen as an indicator of worker confidence in finding another job.
And one factor that may play into worker confidence to quit a job to find another is education. Unemployment across all education levels has dropped considerably, it is just two percent for people with at least a college Bachelor’s degree.
"It's the diplomate divide redux. If you have a B.A. or higher you're A-OK. I think for others, they will get more (pay), but it won't keep pace with inflation."