PNC, Wells Fargo expect Florida’s hot economy to cool amid efforts to control Covid-19

Even while the temperatures outside heat up, containment efforts for Covid-19 coronavirus are putting a chill on Florida’s economy.

Economists from Wells Fargo Securities and The PNC Financial Services Group weighed in with separate reports on the likelihood of a recession and other fallout as state and local officials impose restrictions on restaurants, bars and beaches, and as sporting events are cancelled or postponed.

“All regional U.S. economies will contract, but some will contract more than others. The largest contractions will be areas with a lot of high-tech manufacturing, which is experiencing supply-chain disruptions, and those that are major tourist areas,” Pittsburgh-based PNC said in a March 16 report.

“In Florida, we expect a slowdown due to slow consumer spending and due to the restrictions on movements, and also due to the fact that there’s been a loss in the stock market. Consumers are being more cautious and they’re likely to spend less going forward,” said Abbey Omodunbi, assistant vice president and economist.

The St. Petersburg and Tampa areas will feel the pinch from the economic activity that was lost with the cancellations of the Firestone Grand Prix in St. Petersburg and the NCAA Tournament at Amalie Arena, among other events, he said, but added it’s too early to put precise numbers on the lost activity.

“There will probably be layoffs in consumer-facing industries, like leisure, hospitality and travel,” Omodunbi said.

Florida added jobs in both January and February, with gains across nearly every industry and geography, Wells Fargo Securities said in a March 17 report. Job gains in Florida’s large leisure and hospitality industry were more modest than in the past, as employment grew in sectors such as professional and technical services and manufacturing.

“Efforts to contain the Covid-19 outbreak are almost certain to abruptly end Florida’s strong run of employment gains. Job losses are likely to be heaviest among hourly workers, many of whom are in retailing and the leisure and hospitality sector. Manufacturing, construction, healthcare and professional and technical services should be less impacted,” Wells Fargo’s report said. “While a recession seems certain, Florida has typically weathered recessions reasonably well, as long as real estate was not been grossly overbuilt.”

PNC’s report put the likelihood of a recession nationwide at “at least 50 percent” right now, depending on how long the current crisis lasts, the effectiveness of the government response and whether the healthcare system effectively deals with the Covid-19 outbreak.

“We were in a good position before the crisis started so we don’t expect this to be as severe as the financial crisis. We’re  much better prepared in terms of our consumer balance sheets and so on,” Omodunbi said.

As of mid-afternoon Tuesday, the largest publicly traded companies headquartered in the Tampa-St. Petersburg area were turning in a mixed performance on Wall Street. One of the hardest hit local stocks over the past two days has been Bloomin’ Brands (Nasdaq: BLMN), the Tampa company that operates Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse & Wine Bar.

Restaurants nationwide are being ordered to close, or to reduce their operating hours and seating capacity.

Bloomin’s stock, which trading above $20 a share in January and most of February, fell as low as $4.54 a share Tuesday but was trending up slightly before the market close.