Future US Economic Policy Could Hurt Coral Gables

August 13, 2010 Leave a comment

There is a lot of talk about resolving the fiscal crisis in the US by having higher taxes (letting the Bush tax cut expire for the wealthy) and slowing the growth and reducing spending on social security, medicare and medicare.

This will hurt Coral Gables in several ways.

  • Reduced spending will hit the State of Florida’s budget and cut transfers to local government and  education spending (putting more pressure on property taxes);
  • Reduced spending will not be helpful in getting the economy back on track and this will hit consumer spending;
  • There will be less money available to carry out needed infrastructure investments locally;
  • Unemployment will continue to have bad effects since there is pressure to cut compensation for people who are unemployed for long time periods;
  • Retail sales and spending will remain sluggish;
  • It very hard to imagine that there will be a willingness to set up national disaster insurance and relief; and
  • There will be no relief in sight to help cover the costs of excessive local salaries and pensions.

This gives greater urgency to keep property taxes and fees down,  and to do something about salaries and pensions in Coral Gables and build up local reserves.

Filed under Coral Gables, Economy, Finance

More Bad Economic Signs for South Florida

August 12, 2010 Leave a comment

For signs that the local economy will remain stagnant.  Also, you may have seen reports that China has slowed its imports–this hurts Latin American, Miami and commodity prices, as well as the US exporters. Not good signs for Coral Gables and not a good time to raise property taxes.

…for the past 10 weeks, the number of homes for sale — crucial in the supply-demand seesaw that determines real estate prices — has been inching upward, sparking questions about the state of the housing recovery and the effect of foreclosures on the marketplace.

The 4.6 percent increase of homes for sale in South Florida since May 31 represents the first two-month rise since the housing bubble burst, recently released data…

via Housing supply on the rise in South Florida – Real Estate News – MiamiHerald.com.

Filed under Business and Commerce, Coral Gables, Economy, Property Values, Taxes and Fees

Double-Dip Risk

August 11, 2010 Leave a comment

A very respected economist calls for more stimulus.

There’s more than a 50% chance the economy is heading for a double-dip recession. And noted economist and author Robert Shiller tells MarketWatch News Break that the Federal Reserve may now lack the power to end the gloom and doom. Shiller now wants Washington to pass a new job-creating stimulus package.

via Shiller sees significant likelihood of double-dip MarketWatch News Break – MarketWatch.

Filed under Coral Gables, Economy

Economic Future of Coral Gables: A Pessimistic View

August 8, 2010 Leave a comment

What are the prospects for the economy of the City Beautiful?

The slow return of the US economy from the worst economic recession since the Great Depression is raising strong concerns that the US may follow a slow up-and-down growth for many years to come rather than a sustained expansion.  Slow growth is already causing a permanent loss of employment and skills of those unemployed for a long time.  Families are suffering the loss in the values of their homes and savings.

There is a continuing weakness of  small and medium banks from the financial crisis.  The large “to big to fail” banks are still adjusting their business to the new economic realities.  There is even a risk that the US will have another financial crisis in a few years because of more risky behavior and weak capital of the banks and the partial reform of financial regulations.

Coral Gables is not an island unto itself, but it is affected directly or indirectly by the following prevailing economic factors.

  • The economic stagnation is hurting the retail sales  and commercial property values in Coral Gables.  Retail sales are not expected to return until consumers fix their own personal economies;
  • There are restraints on the availability of financing for the construction of new commercial and residential real estate
  • The State of Florida will not have money to transfer to municipalities (see this year’s estimated budget in which these monies fell);
  • The city still has relatively high cost municipal services;
  • There are limits on benefits from city enterprises such as the Biltmore Hotel, the parking system, the golf courses, the sanitary sewer system and the Coral Gables Country Club;
  • The city may not be able to keep up with the maintenance and replacement of  city infrastructure because of budget limitations;
  • Businesses in the city, based on administrative, legal, marketing, media, insurance and financial services, are relatively stable but slow growers;
  • The city has limited reserves for hurricane response;
  • The antiquate tax system of the State discourages new residential owners with its high property taxes; and
  • A county environment with high taxes and structural unemployment casts a pall over Coral Gables.

Filed under Coral Gables, Economy

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