Living in South Florida is different from living in many parts of the country. We have a much greater concentration of retired people drawn here by the weather and lack of an income tax.
Our daily trips to the grocery store often include a long wait behind some 80-year-old counting out his change so slowly that it hurts. This is to be expected. In fact, it’s one of the things my family joked about as we prepared to move to the Sunshine State eight years ago. That’s not to say we were totally prepared…
As we settled into our life in Tampa we noticed the decidedly middle class structure of the economy across all the different groups. There were – and remain – groups of poor and rich, but the middle was pronounced.
Retirees drove Chevys. They seemed to be cost-conscious shoppers. They were on a budget.
As the downturn hit, the middle class was hollowed out. Unemployment rose dramatically in the area and the loss of wealth seemed to know no bounds. Even the older group appeared to take a step back and has not fully rebounded.
The economy has loosened a bit since the depths of the recession, no doubt. Restaurants are full, but not overflowing, and customers have reduced the amount of alcohol they order.
Nice cars are on the road, although most of the vehicles we see here are several years old. Home prices (even in Tampa) have rebounded a bit. But there is still a sense of hesitation and concern.
The middle class, if not under assault, is definitely being required to increase its contribution to daily life. Whatever the type of outlay – homeowner’s insurance, car insurance, income tax, medical expenses, tuition, etc. – it seems to be moving higher. For people on fixed incomes, the rising costs take a heavier toll.
However, this recession among the elderly doesn’t appear to be universal. Wide swaths of people have not only recovered from the downturn but have prospered quite nicely during the intervening years.
This became apparent recently when I traveled to Naples, FL. My first realization was that every car seemed to be less than two years old… and spotlessly clean.
As we drove into Naples I’m sure my wife rolled her eyes a bit (although I didn’t see it) because I started talking economics. The age of the population is well above that of the nation, which is obvious from simply driving around, but the area is clearly operating at a wealth and income level that far outstrips most others. And it is not a neighborhood thing, it’s the city.
According to the City-Data website for Naples, the average age in the town is 64.2 years, whereas for the State of Florida it’s 41.3, which is well above the national average of near 37.
As for income, in 2011 Naples recorded median household income of $68,500 versus the Florida median of $44,200 and the national median of roughly $50,000.
Home prices were the biggest factor separating Naples from the rest, with a median home value of $616,000 in 2011 versus the Florida state median of $151,000.
So this Southwest Florida town has income that clocks in at 37% above the national median and home values that register a whopping 300% above the state median. That’s impressive.
The reason this was so fascinating to me was because the city of Naples seemed so normal. We saw Bentleys and Maseratis, which you can find in many towns, but we also saw multitudes of cars from Mercedes to Lexus, BMW and other luxury brands, most appearing to be less than two years old.
The population was active – I had to dodge many a cyclist, runner, and power walker as I drove – and out to spend in restaurants and stores. People were going about their daily lives, just at a much higher level than I see on a daily basis.
According to City-Data, the median income in Tampa is $40,073 (20% below the national median), and the median home price is $148,000, (3% below the state median). Yes, Tampa is a younger town, but even our older population can’t hold a candle to the city of Naples.
The disparity between Tampa and Naples, separated by 160 miles and a wealth of income and assets, exemplifies the national transition over the last five years.
If your wealth was in place before the downturn, then chances are that the Federal Reserve’s policies have served you well. Your assets have rebounded. Your income – based on those assets – has probably increased. The finer things in life are attainable.
But if your income was fixed and your assets a bit underwhelming before things went south, then chances are that daily life is harder to afford. Earned income didn’t rebound much, and those with modest assets in conservative accounts have fallen behind.
This brings up one more difference between Tampa and Naples, a difference that should grab everyone’s attention: Tampa is a lot bigger.
This is yet another similarity with our country. The population that doesn’t control significant assets and hasn’t been able to boost its standard of living in the last half decade is many times larger than the number of people reaping the current benefits.
Stories of flat and falling wages, increased costs of food, fuel, medical care, and tuition, and the growing lack of affordable housing are all commonplace. With interest rates on savings and CDs near zero while the cost of health care marches higher, it seems like we continue to dig a deeper hole.
Given that a much larger percentage of our population is suffering the negative downside of current policies versus the small number of people enjoying the benefits, it makes you wonder how long it can last.
Ahead of the Curve with Adam O’Dell
It seems like every few months now there’s a fight over raising our government’s debt ceiling. But at home, individual consumers are lowering their own personal debt ceilings. Ever since the Great Recession pushed many against a wall, a back-to-basics style of personal financial management has been the only viable option for many.
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