Monday marked the fourth straight day in Ohio of sunny skies and temperatures in the 80s. That’s quite remarkable given that we are just five weeks into spring and the summer solstice is almost two months off. The unusually hot weather was almost nice enough to make one think of being on a Florida spring break vacation – – if the current state of the economy had not already killed that dream.
But is it really always sunny and warm in Florida? Is Ohio that much drearier? Do the two states share similarities other than just the most recent weather conditions?
At the end of this final warm day, I found myself reviewing a proxy statement for a fund invested primarily in Florida municipal bonds. The proxy statement opened my eyes to some of the other similarities between Ohio and Florida.
The fund needed to merge with another fund in the same family for what appeared to be a number of good reasons, including that the abolishment of the Florida intangibles tax in 2007 made Florida municipal securities no longer as attractive to certain investors. Prior to 2007, investments in Florida municipal obligations had been an exception to the intangibles tax.
The proxy statement, as are most, was laden with risk factors. Among others was the following 2008 data relating, generally, to the Florida economy:
- The unemployment rate in Florida in 2008 was higher than the US average.
- Per capita personal income increased in Florida by a lesser percentage in 2008 compared to increases in the four prior years.
- Home median sale prices were down across Florida by a substantially larger percentage than in 2007.
The particular economic data quoted in the proxy statement for Florida seemed to be not much better, and perhaps worse, than comparable figures for Ohio. In large part – – if you trust official statistics released last month – – such a conclusion is correct.
The Bureau of Labor Statistics recently reported that as of March 2009, both Florida and Ohio had a seasonally adjusted unemployment rate of 7.3%.
Similarly, the Bureau of Economic Analysis in March announced that per capital personal income rose in Ohio by 3% in 2008 (over 2007) while increasing only 1.7% in Florida during that same time period.
Finally, according to the January 2009 S&P/Case-Schiller Home Price Index released last month, home sale prices had dropped more steeply in key Florida markets than in Cleveland:
1-month change 1-year change 2-year change
Cleveland -2.2% -5.2% -13.3%
Miami -3.6% -29.4% -43.1%
Tampa -4.4% -23.3% -34.8%
The foregoing statistics, like the recent weather, cast a warmer glow on conditions in Ohio than one might first imagine. And it is true that Florida has been hit comparatively harder in some segments than the Ohio economy.
But all statistics are relative. Just ask an Ohio resident if he would not mind having a house in Florida despite the recent home price freefall. Averages and snapshot comparisons do not always tell the whole truth. After all, the average height of a two-on-two basketball team consisting of Cavs center Zydrunas Ilgauskas and me would be 6’5".