South Florida's economic outlook

It seems clear that the South Florida economy, like that of the rest of the nation, will be slowing to a tortoise pace in 2008.

Much harder to discern is how bad ''bad'' will be.

Many economists and business leaders note that the region's economy is holding up remarkably well in the face of multiple shocks: the housing downturn, the credit crunch and sky-high energy prices.

Miami-Dade and Broward counties are expected to slog through the first half of 2008, with the economy gaining steam in the second half, aided in part by lower interest rates.

HELP FROM ABROAD

The region's big ace in the hole is its strong ties to Latin America and Europe, with robust trade and foreign investment helping offset the domestic softening.

While the specter of a national recession has loomed larger in recent days, the consensus is South Florida will escape.

In these parts, a recession is like a cold front: ''We usually get the tail end of it, and even then, it only lasts a short period,'' says Mike Farra, a partner at the Miami-based accounting firm Morrison, Brown, Argiz & Farra.

The housing market again will largely define the local economy in 2008. But now the biggest engine of growth for South Florida until 2006 has turned into its heaviest drag.

''A couple years ago, housing was the afterburners pushing the economy ahead. Now it's a ballast weighing things down,'' says Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida. ``That will continue until we get some balance in supply and demand. It will take time.''

For 2008, total housing starts are expected to plummet 33 percent in Miami-Dade and 28 percent in Broward, according to Fishkind & Associates, an Orlando-based financial consulting firm. The downturn has hammered local builders such as Lennar and Levitt Corp.'s Levitt & Sons.

Beyond the glut of homes for sale and the dearth of buyers is the question of whether the state will act legislatively to ease the twin burdens of high property taxes and pricey property insurance.

At the same time, the housing downturn and tightening credit mean many homeowners are no longer tapping their home equity to splurge on big-ticket items like powerboats or fancy new cars.

Beyond housing, a crucial factor is how well jobs will hold up. If people keep working, they'll generally keep spending and keep the wheels of the economy turning.

Unemployment in Miami-Fort Lauderdale is expected to climb slightly to about 3.8 percent during 2008 -- still a very low level -- the Institute for Economic Competitiveness predicts. Total employment in the Miami-Fort Lauderdale area will rise 1.5 percent this year, a slower rate but still a gain.

BAPTIST IS HIRING

Miami-Dade's largest private employer, Baptist Health South Florida, for instance, expects to increase its work force of 11,500 people by about 3 percent during 2008 as it pursues a steady growth agenda to meet the rising demand for healthcare, including plans to open a new emergency center and patient tower in South Miami. (But Brian Keeley, Baptist's CEO, says contrary to the notion that healthcare is immune to slowdowns, he expects the region's downturn will mean more bad debts for the facility as a rising number of patients lack health insurance.)

JOB GROWTH

The biggest job growth for Miami-Fort Lauderdale is expected in professional and business services, which should see an average annual growth rate of 5.3 percent, and in the financial sectors, where jobs should expand by 1.7 percent, the Institute for Economic Competitiveness predicts.

A strong influx of European and Latin American visitors, drawn in part by the weak dollar, is expected to keep the region's tourism on solid ground.

As a service-driven economy with little manufacturing and a lot of direct foreign investment, South Florida should come through the downturn relatively well.

''We'll outperform the state in 2008,'' predicts Tony Villamil, chief executive of Washington Economics Group in Coral Gables and chairman of the Beacon Council's economics roundtable. ``South Florida -- especially Miami-Dade -- has been outperforming the state, because of the international sector and clusters like life sciences.''

The accounting profession is one example of how services stay on track despite economic bumps. Clients need help in good times and bad, says Morrison Brown's Farra, ``and quite often, we can find ways to help them get through the hard times.''

UNIVERSITY GROWING

Similarly, Nova University Southeastern University expects to continue to grow and hire more staff to serve a growing number of students, particularly in traditional undergraduate programs and in online distance learning. ''We've faired well in upturns and downturns,'' says Dr. George L. Hanbury II, executive vice president and chief operating officer at Nova, which is Broward's third-largest private employer.

DOLLAR SQUEEZED

To be sure, South Florida, like the rest of the nation, is getting squeezed by high energy prices and the specter of inflation. And the weak U.S. dollar is a double-edged sword. While it draws more free-spending visitors, who may help absorb the glut of condos reshaping Miami's skyline, it also drives up prices.

Everything from clothing to household goods will likely cost more as China -- the world's factory -- allows its currency to strengthen against the dollar.

YUAN'S IMPACT

The revaluation of the Chinese yuan ''will create inflationary pressures on apparel and many other industries,'' says George Feldenkreis, chairman and CEO of Perry Ellis International, a Miami-based apparel company.

Still, South Florida businesses remain somewhat upbeat about their prospects going forward. Click on the related links to read key business leaders in important sectors make their predictions.