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Economy sizzled -- in 2005

Tampa Bay's GDP is likely cooler since ranking 59th.

By HELEN HUNTLEY, Personal Finance Editor
Published September 27, 2007

The Tampa Bay economy grew at nearly twice the national rate during the heady days of 2005. The gross domestic product hit $91.4-billion, making it about the size of the economy of Peru.

The federal government's Bureau of Economic Analysis on Wednesday issued its first report on GDP by metro area and Florida areas came out looking like national stars.

The Palm Coast area in Flagler County was the fastest growing area in the country, up 19 percent from 2004 to 2005. The Tampa Bay metro area grew 5.5 percent, but that was good enough for 59th place out of 363 areas.

The only downer: The stunning numbers provide a snapshot of the past, not a look at the present.

University of Central Florida economist Sean Snaith said "2005 was a different time when we had the afterburners on."

Since then things have slowed considerably. The bureau's state GDP numbers, which came out in June, show Florida's economy went from a 6.7 percent growth rate in 2005 - second best in the nation - to 4.2 percent in 2006, moving it down to 12th place. When the 2006 numbers are available for metro areas, they are expected to show a similar decline. And 2007 is shaping up as slower than 2006.

"A key reason is the slowdown in the housing markets in Florida," said Per Gunnar Berglund, senior economist for Moody's Economy.com. "You might describe Florida as a two-speed economy. You have certain parts that aren't doing that well, all related to housing and housing finance. Then on the other hand, you have parts that are doing very well, such as tourism, education and health care."

He says the rapid growth Florida was experiencing in 2005 simply wasn't sustainable.

While the Tampa Bay area ranked 59th among 363 areas in GDP, some of Florida's other larger metro areas fared better and some worse. Miami-Fort Lauderdale ranked 37th, Orlando ranked 19th and Sarasota-Bradenton ranked 14th, while Jacksonville ranked 137th and Tallahassee ranked 175th.

In Tampa Bay and many other Florida metro areas, the bureau said the biggest component of growth in 2005 was "financial activities," a broad category that includes banking, securities, insurance and real estate sales and rentals.

Professional and business services ranked second, followed by trade.

"In a slowing national context, we're still enjoying pretty robust growth in central Florida," Snaith said.

Berglund agrees.

"I'm optimistic about Florida," he said. "I think the state is going to recover pretty quickly. Once the excesses in the housing market have been worked off, there's going to be upward momentum again."

He said the Tampa Bay area began its housing downturn earlier than some parts of the state, which makes it a strong candidate for earlier recovery.

Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

[Last modified September 26, 2007, 23:26:15]