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Why 2015 will be a big year for Miami’s economy

Miami changed a lot by the numbers in 2014. We built more, hired more and paid more for housing and transit, but the big picture of our economy can be hard to follow. As Miami-Dade County’s chief economist, Dr. Robert Cruz has been tracking the economic health of our county and analyzing what changes mean for our future. So we asked him for a few predictions about what’s ahead for Miami and our $115 billion economy. We also asked about Real Housewives and croquetas.

Econ03

 

Q: So what does a county “chief economist” do?

We monitor how things are going in the economy, and we analyze what the changes would mean for Miami. We look at issues ranging from unemployment and income to macroeconomic things like what’s happening with GDP. We look at monthly employment reports, and we do quarterly reports on labor, real estate and trade. We’re also looking at things like commercial property—how does it look in that sector on metrics like lease rates, subsidies and vacancy rates. All our data come from public sources, mostly from the Census Bureau. There is a lot more data available than there was 10 years ago.

Q: Looking back, how did Miami do in 2014?

2014 looks like a strong year. I’m sure it will be the strongest year since the recession and the recovery. We have had year-to-year growth over 3% in the last few years. We haven’t seen numbers like that since the height of the boom before the recession.

But we still have a lot of people who are in poverty and high unemployment. Unemployment and poverty rates are highest in the enterprise zones [Edit note: enterprise zones are traditionally high-poverty areas designated by Miami-Dade County and the state of Florida which receive special tax benefits and business incentives]. We’re seeing the poverty and unemployment rates go down faster in other areas, but a lot of people are not participating in that progress. That’s a big challenge.


Source: Bureau of Labor Statistics, bls.gov

Q: Many people have an impression that Miami’s a place where a lot of business gets done with duffel bags of cash. Do you see that show up in your work?

I haven’t seen it that way. That’s a colorful idea, though. It is true that people who have less means often don’t have the ability to be heard. But elected officials really know their districts. The really want to know their communities and what they need.

It is sometimes hard to see the actual amount of investment going on. For example, in real estate it’s easy to get information, but when a small business expands and buys a new piece of equipment — that’s hard to track. I’d like to do more with surveys and use other methods to find out things like that—how are people feeling about the economy? Some cities already do this.

Q: Why is 2015 going to be a big year?

The numbers so far all seem to point in a very positive direction. October through the previous October, we added 38,000 jobs. We haven’t seen numbers like that at any point in the recovery so far.

Commercial real estate is booming. Vacancy rates are falling; lease rates are up. Those things reflect strong demand. Industrial development is the first to move forward. Last is office space. Now we’re seeing low vacancy, high rates and more construction in office space. Construction jobs rose 12 percent over the last year. Manufacturing rose 7.5 percent. You have to go back several years to see that kind of of growth. Manufacturing was in consistent decline even before the recession.

I see all these positive changes. Not just one variable, but many variables.

Q: Is this a bubble?

Economists are always worried about a bubble. One thing recently is that housing costs and rent have increased significantly. That could be a problem. But in recent months it seems to have tapered off. And yet the number of sales continues to move in a positive direction.


Source: Zillow, zillow.com

Q: Will people be able to afford to live in the urban core in a few years?

Cities always have higher rents than suburban areas, but there does come a point when the question becomes, “is this a livable city?” That’s important to look at.

Sometimes the market reacts. More units to meet demand, more construction. Hopefully we can maintain price so area is still livable. But wages have to go up too. It appears wages are lagging behind. We have to be concerned about that.

Q: Why are wages lagging?

You lost a lot of human capital in the recession. It’s the competition for workers that drives wages up. Wages tend to lag behind in recovery.

You have to look at what you can do relatively quickly to have quick impact. Methods such as expanding the [Earned Income Tax Credit] and increasing minimum wage. EITC has been successful and there’s agreement on that, but minimum wage is more controversial. Those two things I think would help the economy overall. I think data shows the whole economy gets positive benefits. You put more money in the pockets of individuals who are going to spend that money.

Looking long term, you have to look at education. Early childhood education is a factor we’re seeing. It’s a little harder to quantify, but some studies are showing mixed income communities have positive impacts on things like graduation rates and job growth.

Q: What’s happening in Miami that people may not know?

The demographics of Miami are changing. People don’t realize that. Non-Hispanic whites for many years were getting smaller, but have been increasing in recent years. This community is really changing.

We have concerns about brain drain, but we have the opposite thing happening too. People come here from outside to go to school in Miami Dade County at UM or FIU or MDC. Some stay. Look at the absolute number growth—the number of college degrees is increasing. What’s holding us back is the cost of college. We’re going to need solutions for how to streamline and get skills for good paying jobs without necessarily having a four-year degree.

Q: Let’s get some lightning round predictions. In ten years, what will happen to…

The number of car elevators in apartment buildings? Probably a lot more.

Highway growth? I think it’s going to slow down with more emphasis on public transit. Because we really need funding to be shifted, and our funding sources are starting to shift.

Heat victories? Definitely a few more. May take a while.

Croqueta futures? Definitely more. That’s a mainstay. That’s not going anywhere.

Art Basel? It’s fantastic. This is a signature event for Miami.

Real Housewives? Never watched it.

The real estate market? It will continue growing in cycles; it always does. It’s going to move around, but the overall trend is positive. We do have to look at climate change and sea level rise. Now is the time to plan and make investments. We have to replace water and sewer systems. Commissioners and the mayor have come out to start considering sea level rise in their capital planning, and that’s great.

 

  • Nick D.

    Nonsense! For two years I have been trying to get a job after relocating from NYC and no one gives you a chance here. I have been coming here since I was 7 years old and my parents and myself invested so much into this economy in real estate till this day. To be treated like this with not landing a job after sending thousands of resumes out really leaves a taste of sour grapes. Poor form on Miami’s part and its people.

    • Liz

      Thanks for sharing Nick! You are definitely not the first person we have heard this from. Miami definitely has its ups and downs.

  • Nick D.

    Nonsense! For two years I have been trying to get a job after relocating from NYC and no one gives you a chance here. I have been coming here since I was 7 years old and my parents and myself invested so much into this economy in real estate till this day. To be treated like this with not landing a job after sending thousands of resumes out really leaves a taste of sour grapes. Poor form on Miami’s part and its people.

    • Liz

      Thanks for sharing Nick! You are definitely not the first person we have heard this from. Miami definitely has its ups and downs.