Robert D. Cruz, PhD, Chief Economist Miami-Dade County

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1 Robert D. Cruz, PhD, Chief Economist Miami-Dade County Business Affairs Division, Regulatory and Economic Resources Department Page 1

2 Overview Quick review of economic environment in summer Macroeconomic impacts of Hurricane Andrew in Miami-Dade and Broward counties. Macroeconomic modeling of major environmental events. Impact simulation with the South Florida REMI model. Business Affairs Division, Regulatory and Economic Resources Department Page 2

3 The Economy in U.S. recession from 3Q90 to 1Q91. Slow ( jobless ) recovery begins in 2Q91 National recession and weak recovery weighed heavily on Miami-Dade Employment fell sharply in 1991 vs Local recovery did not begin until Mar 92 From Feb to Aug 92 only 21% of jobs lost in local recession had been recovered. (+6K vs-30k lost) National recession slowed MD population growth in but hurricane led to a transitory drop. Business Affairs Division, Regulatory and Economic Resources Department Page 3

4 August 24 th Andrew hits Homestead Total estimated damage: $26.5B at 1992 prices ($25B in Florida) Damaged in current value $37B 25,500 homes destroyed, 101,000 damaged in Miami- Dade. 90% of residential units in Homestead destroyed 44 deaths (official count) Despite physical devastation and loss of property value, macroeconomic indicators suggest a relatively quick recovery in Miami-Dade and economic benefits to Broward. Business Affairs Division, Regulatory and Economic Resources Department Page 4

5 Miami-Dade population post-andrew Miami-Dade Population Growth Rate 2.2% 1.8% 1.9% trendline growth =1.6% 1.7% 2.0% 1.5% -0.03% Population growth would likely have fallen below trend in 92 without Andrew. But the shortfall in population in 1993 was driven by hurricane related damages. Population did not return to trend until Business Affairs Division, Regulatory and Economic Resources Department Page 5

6 Residents Employed post-andrew Miami-Dade Employment Growth Rate 1.7% trendline growth =1.4% 3.31% 1.5% 2.3% 1.0% -0.5% -1.6% Recessionary pressures reduced employment among County residents in 1991 and the loss of housing and population post- Andrew prolonged the decline into Number of persons working in MDC, however, increased quickly. Business Affairs Division, Regulatory and Economic Resources Department Page 6

7 Miami-Dade Unemployment post-andrew 11.0 Miami-Dade Unemployment Rate Jan-90 Apr-90 Jul-90 Oct-90 Jan-91 Apr-91 Jul-91 Oct-91 Jan-92 Apr-92 Jul-92 Oct-92 Jan-93 Apr-93 Jul-93 Oct-93 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Business Affairs Division, Regulatory and Economic Resources Department Page 7

8 Population Shift Boosts Broward Economy Broward Population Growth Rate 3.56% trendline growth = 2.4% 2.92% 2.45% 2.61% 2.44% 2.04% 2.25% Broward Unemployment Rate, NSA Jan-90 Apr-90 Jul-90 Oct-90 Jan-91 Apr-91 Jul-91 Oct-91 Jan-92 Apr-92 Jul-92 Oct-92 Jan-93 Apr-93 Jul-93 Oct-93 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Population growth (MD migrants) provided increased aggregate demand for Broward firms. Increased the tax base, funded amenities, generated economies of agglomeration changed long term dynamics Business Affairs Division, Regulatory and Economic Resources Department Page 8

9 Economic recovery in Miami-Dade was not evenly distributed. 1990* 2000* 2010** Population: Miami-Dade County 1,937,094 2,253,362 2,496,435 S. Dade Core Impact Area 59,429 64,810 83,737 % of Total 3.1% 2.9% 3.4% Per Capita Income: Miami-Dade County $ 13,686 $ 18,497 $ 22,957 S. Dade Core Impact Area $ 9,896 $ 11,163 $ 15,659 % of Total 72.3% 60.4% 68.2% * Decennial Census ** ACS Yr survey Recovery in areas hardest hit by the storm lagged until the mid-2000s. Business Affairs Division, Regulatory and Economic Resources Department Page 9

10 South Dade Core Impact Area Business Affairs Division, Regulatory and Economic Resources Department Page 10

11 Modeling economic impact of Andrew type damages today Which county(ies) are directly impacted by hurricane? Simulation parameters (assumptions) $37B loss to residential capital stock Recovery of insurance losses through higher premiums amortized over 10-years Hurricane event induced intra-regional population shifts South Florida REMI model Seven South Florida counties plus rest of Florida Model allows for population and capital migration across geographies, and changes in prices of goods and services Includes a demand side and a supply side Business Affairs Division, Regulatory and Economic Resources Department Page 11

12 Basic Simulation (illustration) 2.50% Employment Impact, % Difference from Baseline Miami-Dade Broward Rest-of-Florida 2.23% 2.00% 1.50% 1.70% 1.67% 1.00% 0.50% 0.00% -0.50% 0.65% 0.14% -0.36% 0.21% 1.02% 0.36% -0.22% Increase in ins. premiums spread across state and not borne entirely in Miami-Dade or SF 7-county region No population shift was incorporated in simulation Business Affairs Division, Regulatory and Economic Resources Department Page 12

Robert D. Cruz, PhD, Chief Economist

Robert D. Cruz, PhD, Chief Economist Office of Economic Development and International Trade Miami-Dade County cruzr1@miamidade.gov / www.miamidade.gov/oedit Office of Economic Development and International