Economic Outlook
Solid public support for biotech research

By: Mike Seemuth

Publicly funded biotechnology research in South Florida is likely to continue to show sturdy resistance to economic recession.
 
Federal grant dollars are rolling into the University of Miami and Jupiter-based Scripps Florida, reinforcing biotechnology in South Florida at a time when other sectors of the local economy are still reeling from recession.
 
The University of Miami Miller School of Medicine collected $122.8 million from the National Institutes of Health in the fiscal year ended last Sept. 30, and ranked 41st among all U.S. medical schools in NIH funding, up from 43rd the prior year and 52nd in 2005. “The Miller School of Medicine continues to show tremendous growth in its research portfolio,” Pascal Goldschmidt, the dean of the school, said in a prepared statement.
 
Scripps Florida, which began operating in 2004, collected $31.5 million of NIH funding in its 2009 fiscal year and has gathered $143 million of grant money since its inception. The state government committed $310 million to help the La Jolla, Calif.-based Scripps Institute cover the startup costs of Scripps Florida, which appears increasingly prepared to start operating without state subsidies, as scheduled, in 2014.
 
“One of the challenges for Scripps is that, by the time the state funding is gone, they’re going to be on their own,” so research grants are vital to ongoing operations, and “we’re seeing that grow,” said David Gury, chairman of Scripps Florida Funding Corp., a nonprofit entity that oversees the state’s investment in Scripps Florida.
 
Scripps Florida had 340 scientific and administrative staff at the end of 2009, 16 positions ahead of its target and plans to directly employ 545 by 2014. Scripps Florida also has set up partnerships with more than 70 small businesses and has filed more than 80 patent applications.
 
Expanding research activity at Scripps Florida and UM has helped to sustain growth in education and health services, the only major category of South Florida employment that has continued to grow on a year-over-year basis during the recession.
 
The state Agency for Workforce Innovation reported that employment in education and health services in Miami-Dade, Broward and Palm Beach counties increased to 332,900 jobs in February, up 1.7 percent from the same month last year, while total employment decreased, year over year, by 3.4 percent.
 
Momentum in sales of energy-efficient appliances may outlast stimulus
 
A jolt of economic stimulus is likely to add power to sales of new household appliances that consume less energy than earlier models.
 
Buyers of air conditioners, dishwashers and other appliances with high efficiency ratings can defray the cost by collecting a rebate from the state government and claiming a federal tax credit with a combined value as much as $3,000.
 
But even after the state rebate and the tax credit expire, strong consumer demand for electrical appliances that cost less to operate could help sustain sales growth.
 
“That’s not a trend that’s going to stop,” said Albert Nahmad, president and chief executive officer of Coconut Grove-based Watsco, a leading distributor of air conditioning and heating equipment. “That is a positive trend that it is going to go on for many years.”
 
While Watsco has faced difficult business conditions related to the housing industry slump, the company also has seen a spurt in sales of air conditioners that are highly efficient. “We expect this trend to continue, especially as the normal replacement cycle is restored to historic levels and pent-up demand unfolds,” Nahmad said on the company’s conference call with analysts to discuss fourth-quarter results. Watsco has 505 locations in the U.S. and abroad.
 
Consumers in economically ravaged South Florida may be more cautious than those in other parts of the nation, however. The University of Florida’s index of consumer confidence statewide fell from February to March, and the biggest change among the five components of the index was a sharp decline in Floridians’ belief that it was a good time to make a major purchase.
 
The state will pay rebates up to $1,500 each to qualified buyers of appliances on a first come, first served basis, for purchases made between April 16 and April 25.
 
Buyers who place new appliances into service from January 2009 through December 2010 can qualify for a federal tax credit that would reduce their tax bill by as much as $1,500. Buyers qualify for both the federal tax credit and the state rebate by purchasing appliances with certification from Energy Star, a federally sponsored program to promote sales of products that consume energy efficiently.
 
Job growth in Florida may resume more slowly in coastal regions
 
South Florida may wait longer than most parts of the nation for job growth to resume.
 
The federal government reported last week that the U.S. unemployment rate was unchanged in March, matching the 9.7 percent rate in February, while employers created 162,000 more jobs than they eliminated, the best monthly report on the nation’s labor market in three years.
 
South Florida is lagging, though. The state’s economy’s could be creating more jobs than it destroys by summer, but the job market is likely to recover at a slower pace in South Florida and other coastal regions than in the state’s interior regions.
 
The state government has forecast that employment growth in Florida will resume after a long period of decline in the April-June period, rising in the second quarter to 7.21 million jobs from 7.17 million jobs in the first quarter. But “the coastal areas that relied heavily on construction and development are going to have a little bit slower time before they reach significant improvement,” said Amy Baker, chief economist to the Florida Legislature.
 
Baker said the state’s full recovery from recession will be gradual and is pending a robust resumption of household relocations from the Northeast and other parts of the nation to Florida, particularly its popular coastal regions: “We are anticipating that it will take a little while for folks to start selling their homes and moving to other places.”
 
The University of Central Florida’s Institute for Economic Competitiveness expects total employment in South Florida will average 2.23 million jobs during the second quarter of the year, almost unchanged from the January-March period, and to rise steadily in subsequent quarters.
 
About 188,000 jobs in South Florida have vanished since November 2007, when employment in the tri-county area peaked at 2.71 million, according to the state Agency for Workforce Innovation.