We Buy
Houses Orlando
IBuyMoreHomes.com
Any Condition Any Situation Anywhere (407) 310-4007
Tough times test Central Florida's financial fortitude
Central Floridians trim expenses, but some still struggle to make ends meet
Christopher Boyd
Sentinel Staff Writer
March 23, 2008
Rising consumer prices and slumping home values are straining some Central
Floridians, especially those with lower incomes and oversized mortgage
payments.
People who until recently had counted on home-equity lines and other forms of credit to bridge the gap between stagnant incomes and higher prices for food, gas and other items are particularly vulnerable as lenders clamp down on underwriting standards.
For those with stock portfolios, high-paying jobs and manageable mortgages, the economy hasn't produced major hardships so far. But consumers with modest incomes and big debts are facing a major crunch.
"There's a lot of pain ahead, without a doubt," said Christopher Viale, president and chief executive officer of Cambridge Credit Counseling in Agawam, Mass. "With energy costs rising, people have less money to pay their debts. Once they hit penalty rates, they often can't keep going."
Viale, whose nonprofit company advises debt-strapped consumers, said some people need to undertake radical changes before they reach a point where they can't repair their credit.
"People need to move to less-expensive housing, even if it means uprooting their families and moving to different school districts," he said. "There is often no other alternative."
That's precisely what Kim Hanley, a custodian at Walt Disney World, is doing.
"My house is up for sale," Hanley said. "I just put it on the market. I can't keep up; it's gotten to be too much. The economy is terrible; gas prices are ridiculous. I've even done things like moved to a slower-speed Internet connection. I've cut down on air conditioning. But it's not enough."
Hanley, a single parent in her 40s with a teenage daughter, makes $11.82 an hour at Disney but said she has been on medical leave recently and is falling behind.
"At my age, I expected to have a nice little nest egg, but I hardly have any savings," she said. "It's hard to keep up."
Not surprisingly, things aren't nearly as bad on the other end of the economic spectrum. Robert Kurtz, president of American Affluence Research Center in Atlanta, surveys people with incomes in the top 10 percent. According to Kurtz, nearly half of those folks say they aren't planning any changes in their spending habits in coming months.
"A lot of these people understand that markets go up and down, and they are sophisticated consumers," he said. "I think the people in this category are somewhat insulated from the tangible effects of what is going on with the economy."
Richard Black, who owns an Orlando marketing company and says his income is in the six-digit range, said he expects leaner times in 2008. But so far, his adjustments have been small. For instance, he doesn't travel on a whim anymore.
"I used to just take off and go," Black said. "Now I don't do that. Even in my work, I am doing more conference calls."
For the middle class, the effect of the economy's downturn is harder to measure. Those with large debts and jobs in troubled industries such as construction, real estate and finance are decidedly more nervous than others. But as more and more people invest their savings in the stock market, the wild gyrations on Wall Street are a daily source of stress.
Confidence boost only brief?
Chris McCarty, who directs the University of Florida's monthly consumer-confidence survey, said a small increase in Floridians' confidence levels last month is likely to vanish in his March report, scheduled for release Tuesday. And while their expectations for personal finances and the U.S. economy improved a bit in February, their confidence in now being a good time to buy a big-ticket item such as a car or appliance fell to its lowest level since the 1990-91 recession.
"I don't think the Florida consumer is alone in wondering what to do next," he said. "But we had a bigger upside when housing prices were on the rise, so we have further to fall. That has an impact on people."
Recently revised employment data show that Florida has been losing jobs since last summer, not gaining them as reported earlier. University of Central Florida economist Sean Snaith said there is no doubt the state is in a recession.
"I think a combination of things have brought the economy down," Snaith said. "We could have handled housing-price declines and energy-price increases by themselves. But you take those two things and add the credit-market problems, and the economy goes into recession."
Yet Snaith says the recession should be short, lifting as the effects of Federal Reserve interest-rate cuts and Congress' recently adopted stimulus package spread through the economy. Through its decision this month to bail out the investment bank Bear Stearns, the Fed showed its resolve to do what it takes to avert a panic that could spread through the financial sector.
Hazy hiring outlook
Even if the stimulus package works, the economy still has issues. There is concern that the quick return to low interest rates will stir inflation, which has accelerated in the past year on the back of rising energy and food costs. And businesses will need access to credit before they can grow and hire.
When Manpower Inc. surveyed U.S. employers recently about their hiring plans for the spring, Orlando-area businesses were uncertain about the future to an unusual degree. Though none were planning layoffs during the second quarter, compared with 14 percent of companies statewide and 9 percent nationwide that were, 40 percent of the local businesses surveyed said they didn't know what they would do, compared with 10 percent statewide and just 5 percent nationwide.
For many Central Floridians, however, particularly those searching for work, the downturn is already palpable.
Marcos Tamez of Casselberry said he thinks it has impeded his search for a new job. Tamez, 31, left a media sales position in Tampa last fall and is now competing with an assortment of other sales workers -- many from the battered real-estate and mortgage-brokerage fields -- in his search.
"They've kind of saturated the market," Tamez said, though he said that the bigger problem is corporate timidity.
"Companies right now, they just don't want to take chances," he said. "They are dragging their feet."
Mark Chediak and Jerry W. Jackson of the Sentinel staff contributed to this report. Christopher Boyd can be reached at 407- 420-5723 or cboyd@orlandosentinel.com.
Back to More Real Estate In the News
People who until recently had counted on home-equity lines and other forms of credit to bridge the gap between stagnant incomes and higher prices for food, gas and other items are particularly vulnerable as lenders clamp down on underwriting standards.
For those with stock portfolios, high-paying jobs and manageable mortgages, the economy hasn't produced major hardships so far. But consumers with modest incomes and big debts are facing a major crunch.
"There's a lot of pain ahead, without a doubt," said Christopher Viale, president and chief executive officer of Cambridge Credit Counseling in Agawam, Mass. "With energy costs rising, people have less money to pay their debts. Once they hit penalty rates, they often can't keep going."
Viale, whose nonprofit company advises debt-strapped consumers, said some people need to undertake radical changes before they reach a point where they can't repair their credit.
"People need to move to less-expensive housing, even if it means uprooting their families and moving to different school districts," he said. "There is often no other alternative."
That's precisely what Kim Hanley, a custodian at Walt Disney World, is doing.
"My house is up for sale," Hanley said. "I just put it on the market. I can't keep up; it's gotten to be too much. The economy is terrible; gas prices are ridiculous. I've even done things like moved to a slower-speed Internet connection. I've cut down on air conditioning. But it's not enough."
Hanley, a single parent in her 40s with a teenage daughter, makes $11.82 an hour at Disney but said she has been on medical leave recently and is falling behind.
"At my age, I expected to have a nice little nest egg, but I hardly have any savings," she said. "It's hard to keep up."
Not surprisingly, things aren't nearly as bad on the other end of the economic spectrum. Robert Kurtz, president of American Affluence Research Center in Atlanta, surveys people with incomes in the top 10 percent. According to Kurtz, nearly half of those folks say they aren't planning any changes in their spending habits in coming months.
"A lot of these people understand that markets go up and down, and they are sophisticated consumers," he said. "I think the people in this category are somewhat insulated from the tangible effects of what is going on with the economy."
Richard Black, who owns an Orlando marketing company and says his income is in the six-digit range, said he expects leaner times in 2008. But so far, his adjustments have been small. For instance, he doesn't travel on a whim anymore.
"I used to just take off and go," Black said. "Now I don't do that. Even in my work, I am doing more conference calls."
For the middle class, the effect of the economy's downturn is harder to measure. Those with large debts and jobs in troubled industries such as construction, real estate and finance are decidedly more nervous than others. But as more and more people invest their savings in the stock market, the wild gyrations on Wall Street are a daily source of stress.
Confidence boost only brief?
Chris McCarty, who directs the University of Florida's monthly consumer-confidence survey, said a small increase in Floridians' confidence levels last month is likely to vanish in his March report, scheduled for release Tuesday. And while their expectations for personal finances and the U.S. economy improved a bit in February, their confidence in now being a good time to buy a big-ticket item such as a car or appliance fell to its lowest level since the 1990-91 recession.
"I don't think the Florida consumer is alone in wondering what to do next," he said. "But we had a bigger upside when housing prices were on the rise, so we have further to fall. That has an impact on people."
Recently revised employment data show that Florida has been losing jobs since last summer, not gaining them as reported earlier. University of Central Florida economist Sean Snaith said there is no doubt the state is in a recession.
"I think a combination of things have brought the economy down," Snaith said. "We could have handled housing-price declines and energy-price increases by themselves. But you take those two things and add the credit-market problems, and the economy goes into recession."
Yet Snaith says the recession should be short, lifting as the effects of Federal Reserve interest-rate cuts and Congress' recently adopted stimulus package spread through the economy. Through its decision this month to bail out the investment bank Bear Stearns, the Fed showed its resolve to do what it takes to avert a panic that could spread through the financial sector.
Hazy hiring outlook
Even if the stimulus package works, the economy still has issues. There is concern that the quick return to low interest rates will stir inflation, which has accelerated in the past year on the back of rising energy and food costs. And businesses will need access to credit before they can grow and hire.
When Manpower Inc. surveyed U.S. employers recently about their hiring plans for the spring, Orlando-area businesses were uncertain about the future to an unusual degree. Though none were planning layoffs during the second quarter, compared with 14 percent of companies statewide and 9 percent nationwide that were, 40 percent of the local businesses surveyed said they didn't know what they would do, compared with 10 percent statewide and just 5 percent nationwide.
For many Central Floridians, however, particularly those searching for work, the downturn is already palpable.
Marcos Tamez of Casselberry said he thinks it has impeded his search for a new job. Tamez, 31, left a media sales position in Tampa last fall and is now competing with an assortment of other sales workers -- many from the battered real-estate and mortgage-brokerage fields -- in his search.
"They've kind of saturated the market," Tamez said, though he said that the bigger problem is corporate timidity.
"Companies right now, they just don't want to take chances," he said. "They are dragging their feet."
Mark Chediak and Jerry W. Jackson of the Sentinel staff contributed to this report. Christopher Boyd can be reached at 407- 420-5723 or cboyd@orlandosentinel.com.
Back to More Real Estate In the News
Copyright © 2008, Orlando Sentinel