The Commerce Department announced this week the U.S. economy shrunk at an annual rate of 0.3 percent over the third quarter, but Cape Coral residents don’t need additional economic indices to tell them the economy is headed in the wrong direction.

A growing local housing bubble in the middle of the decade burst in late 2006 and home values have been declining ever since. The subsequent slowing of construction ventures led to layoffs in that industry, which, in turn, have led to the current spike in unemployment.

Because Cape Coral’s recent history closely mirrors the narrative of the national economy, several recent national media stories have pointed to the city as the poster child of the housing and economic crisis. But local experts say the Cape is merely a victim of the downside of a regular economic cycle, that the fundamentals of the city are strong, and the city will rebound eventually.

Mike Jackson, economic development director for Cape Coral, said a turnaround in the housing sector will mean an overall turnaround for the city.

“The economy of the Cape is heavily dependent upon the real estate business. The regional economy improves as the real estate market improves,” Jackson said.

There are some early signs that turnaround might be happening in the Cape, however slowly.

While home values may be much lower, and selling at lower prices, they are selling. A report from Gloria Tate of Raso Realty reveals that 441 single-family homes were sold in Cape Coral in September, compared to 144 in September 2007. The lowest sale price of any property in September, however, was $27,000, compared to $75,000 in September 2007.

Commercial Realtor Gary Tasman of Cushman & Wakefield said that businesses will start to look at Cape Coral again after the housing market rebounds.

“Commercial always trails residential. Without a good solid residential base, there’s no need for commercial,” Tasman said.

He added the city will be ready to welcome businesses back when it is time. According to a Cushman & Wakefield report, there is 380,128 square feet of available office space in the Cape — a 21 percent vacancy rate. That means there will be space for businesses to move in to when the market turns around.

Those smaller businesses that aren’t tied to construction and real estate are the ones Jackson is trying to lure to the Cape.

“We’re focusing on the kind of businesses that are ready and a quick fit for Cape Coral,” Jackson said.

Although the recent national press coverage may have shown Cape Coral in a bad light, Jackson said it will turn investors on to the good deals in the city.

Tasman forecasts a turnaround sooner rather than later.

“We’re much, much closer to the bottom than we are to the top,” Tasman said.