Financial chill in Carolinas? Try blaming Florida

Amid the bad earnings, bankruptcies and other bleak financial news from Carolinas companies, executives are increasingly blaming some of the gloom on the Sunshine State.

From Fortune 500 corporations to family-owned businesses, many area companies invested in Florida in recent years to capture a piece of the state's population boom. Now that the housing market has collapsed, growth has stalled, tourism has ebbed and consumer spending is down, a chill has fallen on the state's once-sizzling economy.

Between commercial jet travel and air conditioning, Florida became more accessible and attractive for travelers and homeowners in the 1950s and '60s, said David Denslow, research economist at the University of Florida's Bureau of Economic and Business Research in Gainesville. The expansion of interstate highways in the 1970s and '80s improved access to Florida even more, he said.

By the 21st century, Denslow said, a big chunk of the Florida labor force was in housing construction. From 2000 to 2006, he said, average home prices doubled.

“It just booms then,” he said, “and everybody is making a ton of money.”

Where homes go, retail follows. Lowe's, which opened its first Florida stores in 1993, had 37 stores in 2000. That number doubled by 2005 and tripled by the end of last year, surpassing North Carolina for the No. 2 spot among states, behind only Texas.

By 2008, however, Florida was in a free fall. High prices and a host of new developments led to a housing glut, and the growing number of “halfbacks” – people who moved from the Northeast of Midwest to Florida, then moved halfway back to states such as North Carolina or Tennessee – didn't help. So much of the economy was tied to housing, Denslow said, and “when all that unwinds, then we fall pretty hard.”

Instead of nearly 20,000 housing starts a month at the peak of the boom, Florida had about 2,000 a month earlier this year, Denslow said.

Financial chill in Carolinas? Try blaming Florida - The Charlotte Observer - July 13, 2009