Business Advisory Board: In Search of Economic Certainty

While forced cuts to the federal budget are contributing to an uncertain economic climate, participants in the Daily Business Review’s quarterly Business Advisory Board panel are far from panicking.

They noted some businesses put hiring on hold, but others could benefit from an increase in public-private partnerships resulting from sequestration.

Just as important to the panelists: the availability of capital for business expansion, Latin America’s growing influence on our economy and the real estate industry, education and the health of South Florida law firms.

Banks have started to loosen their business lending to real estate developers and others that once had easy access to capital. The experts say lenders and customers are still grappling with the Dodd-Frank Act passed in the wake of upheaval in the financial markets.

Our experts also say many companies with jobs to fill struggle to find qualified workers. Many lack skills to survive in a high-tech economy. Educators, they said, need to rethink how they prepare students for the work force. They also urged vocational schools to play a larger role in turning out workers who aren’t interested in a college degree.

Meanwhile, many South Florida law firms are experiencing “a cultural shift” by hiring contract workers. The firms save money because the pay scale is lower, and they don’t have to provide benefits.

Economy: Federal budget cuts cloud outlook, but sky isn’t falling

Sequestration is creating economic uncertainty, but no one’s ready to panic over the mandated federal budget cuts yet.

Still, “I am concerned about how the sequester could affect the unemployment rate here,” Francisco Cerezo said.

Other panelists were more upbeat. Sequestration could have a positive side. Since the federal government has less money to spend on infrastructure upgrades, it might choose to partner with the private sector to create more private-public partnerships, Scott Baena said.

“They proliferate when government isn’t able to spend money,” he said.

Entering the second quarter, the region’s employment data are giving mixed signals.

In Miami-Dade, the unemployment rate in February was 9.4 percent compared with 9.2 percent a year earlier, the state Department of Economic Opportunity reported.

Broward County’s jobless rate was 6.2 percent in February versus 7.8 percent in February 2012. Palm Beach County reported a 7.4 percent rate, down from 9.1 percent a year before.

Overall, Florida had an unemployment rate of 7.5 percent in February, slightly better than the national rate of 7.7 percent. The national rate for March dropped to 7.6 percent, the lowest in four years.

Some businesses haven’t yet been impacted by sequester cuts. In fact, many are growing.

“By and large, our clients are expanding and feeling more optimistic,” said Jim Kaufman, whose company bills about $80 million in services in accounting and related fields, mostly in South Florida. “We added 60 jobs in South Florida in the last 12 months.”

Vanessa Grout agreed some companies are expanding but said more companies could grow more quickly but for two pressing challenges: one is finding talent.