Sustainability Is the New Economy

This is way more than another trough or recession; this is a great upheaval, the dawn of an entirely new economy. The new economy is about innovation that seeks to preserve rather than consume; protect rather than destroy; nurture rather than exploit; and with a sense of stewardship rather than a sense of entitlement. The truth is that none of us is entitled to anything, and we seem to be learning that lesson now.
We are off on a whole new adventure. A hundred years ago we were an agrarian economy about to shift into the industrial revolution. We never saw it coming and we never went back to the farms. But, just 50 years later we were transitioning from a manufacturing to knowledge-based economy. IBM, Honeywell and Control Data were the new frontiers.
The first computers were the size of houses, but more and more of the products we were producing were being influenced by technological knowledge. Think how many simple items now have some sort of computer in them.
In the last four decades, we have been witness to an almost mind-numbing number of previously unimagined gizmos, and I am sure that there are more to come.
The old economy was all about making stuff. It was about creating products for which no demand yet existed. It was about making stuff better, faster, smaller and cheaper. Technology itself is all about obsolescence, and so the products themselves weren’t made to last.
We might have the option to replace some parts or a new battery, but eventually, we will be forced to buy a replacement. Technological advances create their own repeat customers, but that’s only part of it. When the power source dies, the cost of replacing it is often close to the cost of the current upgrade. And then, of course, there is Billy Mays; perhaps, the all time King-daddy shill for cheap, disposable crap.
It hit its peak for me when I ditched my $7,000 IBM PS 2 Model 50Z and bought a $4,000 Toshiba notebook. Since then, I have had more computers than I can recall, 7 two-line telephones with voice mail, three video cameras, two iPods, and a whole bunch of cell phones since my first one in 1989. Each smaller and more fully featured than the one before.
And, it’s all good…except for this: along the way we burned through a lot of natural resources and we made a mountain of regular waste, “e-waste” and toxic waste, and we recently discovered that we have no away in which to throw it all.
During this downturn, demand for replacement items and parts has been deferred, not eliminated, so consumers will soon be forced to spend again and that alone could rally the economy. But the long-term opportunities are in sustainability. That means rethinking how we approach meeting our needs, as well as, developing passive renewable energy opportunities, sustainable and reusable materials, and investing in our infrastructure.
We should repair and maintain the great national treasures gifted to us by the sweat of our fathers, grandfathers, and great grandfathers. For decades, we have deferred maintenance. Rails, roads, wastewater treatment plants, dams, and other structures were given a D grade from the American Society of Civil Engineers in 2005. Those are our assets, bought and paid for with our taxes and then left to deteriorate.
In San Diego, we have developed a sparkling modern waterfront city on top of regularly collapsing water and sewer lines. Inadequate distribution methods and a willful failure on the part of local leadership to get behind desalinization have led to water rationing. We deserve more for our taxes.
Across the country we have monuments crumbling, bridges collapsing, and parks that cannot be enjoyed by the people who own them-us. It makes me angry that there is always plenty of money for destruction, but no money to rebuild our own country. Now is the time. We need jobs in construction, and we have bridges to stabilize and maintain into the future and a laundry list of infrastructure issues to address. Spend a tax dollar there and everybody wins.
When we are done spending, we will have something more to show for it than the goodwill of the Iraqi people.
Bailing out the banks and yesterdays manufacturers won’t change anything. The new economy is inevitable; cooperation is optional. But, change is good and necessary and well overdo.
Like most other Americans, I have been absolutely gob-smacked by the speed at which my prosperity vanished. However, we may look back on this as the best thing that ever happened to us. If it changes our attitudes, it will at least be better for those who follow after us. We will have tried to leave them adequate resources with which to sustain themselves and perhaps created a new economy to support ourselves today.

Florida Economic Outlook

U.S. economic conditions deteriorated significantly late last year, after the financial crisis intensified. Real GDP fell at a 5.7 percent annual rate during the first quarter of 2009, following a 6.3 percent annual rate decline in the fourth quarter. Output has fallen 2.5 percent over the past year, marking the sharpest drop in output since the third quarter of 1982. Weakness is extraordinarily broad-based throughout the economy, with even the historically recession-resistant education, healthcare and government sectors seeing signs of strain.

We believe the fourth quarter of last year and the first quarter of 2009 will mark the darkest hours of this recession. Successive quarters should see conditions gradually improve. The recession, however, will likely drag on through this summer, but the worst has likely passed. This means the current recession will be the longest and deepest since the 1930s. Afterward, we expect a recovery to gradually build momentum. Many of the hardest-hit sectors, including housing, financial services and commercial real estate, will take longer to recover to historically healthy levels, but the recovery will eventually reach every corner of the economy.

Florida faces an even more difficult road to recovery. The Sunshine State went into recession a full nine months ahead of the nation, and excesses in housing and commercial real estate are considerably worse than the nation as a whole. Nonfarm employment is on pace to decline by nearly nine percent peak-to-trough, producing an aggregate loss of close to 720,000 jobs, including a net loss of 430,000 jobs this year. The unemployment rate is expected to top out at around 11 percent and would rise even further if not for the significant out-migration of prime working-age adults to neighboring states and Texas.

Housing Remains Front and Center
The housing bust is clearly Florida’s largest immediate problem. Single-family housing is extremely overbuilt, particularly along Florida’s central Atlantic coast, in southwestern Florida, in central Florida, in the outlying areas around Orlando and in many other of the outlying areas around the state’s other major employment centers. Permits for new single-family homes have tumbled 90 percent from their peaks nearly four years ago and the inventory of vacant, developed lots remains excessive throughout much of the state. Condominium development also got considerably out of balance, with far too many high-end units built in Miami, the Florida panhandle and many other metropolitan areas.

The median sales price of an existing home shot up to $255,000 at the peak of the housing boom in November 2005, as measured by the Florida Association of Realtors. Prices are currently down roughly 45 percent from that peak. Some markets, including areas around Fort Myers, Tampa and Fort Walton Beach, will see peak-to-trough price declines of 60 percent or more. Sales of existing homes are off 45 percent from their peak but have shown signs of stabilization recently. A large proportion of recent transactions, however, have been foreclosure sales or distressed transactions.