Finally, Good News for the Florida Economy
Florida’s economy appears to be breaking free of the dark ages and is poised to live up to its moniker – the Sunshine State.
“Florida’s economy may not be experiencing a full-blown Renaissance right now, but it is beginning to shake off the effects of the housing plague on its economy. 2013 is shaping up to be a year for Florida to transition back into higher growth,” said economist Sean Snaith, director of UCF’s Institute for Economic Competitiveness.
There are still some dangerous potholes to avoid, which can send the economy crashing, such as the Euro crisis and the impacts of the sequester in the United States which are expected to really be felt in the second quarter of this year.
The housing market is enjoying some recovery, but Snaith cautions that banks need to loosen the purse strings. According to data from Florida Realtors, 51 percent of single-family and 77 percent of townhome transactions were cash sales in February. He says this high share of cash transactions is a threat to the sustained recovery of the housing market. But if purse strings loosen a bit, the housing market can spur even healthier growth that will translate into every part of the economy.
“As 2013 gives way to 2014, Florida’s economy will begin to grow more rapidly, labor markets will improve, and housing prices will benefit from the improving fundamentals. Economic and demographic growth will provide a solid foundation upon which a housing sector can once again grow in a healthier manner. Once these key drivers are back in place for Florida, the state’s economic outlook will be rosy once again,” Snaith said.
Some areas are set to reap bigger rewards. The Naples-Marco Island area is expected to have among the strongest growth in the state. The Orlando-Kissimmee area along with the Tampa-St. Petersburg-Clearwater and the Miami-Fort Lauderdale-Pompano Beach zone are expected to have moderate growth, while the Pensacola-Ferry Pass-Brent area and Deltona-Daytona Beach-Ormond Beach area will see among the lowest growth rates in the metro area of the forecast. But all areas will see some growth, a clear contrast to previous years, he said.
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Other highlights from the report include:
Unemployment rates have fallen from their peaks, in part due to a low labor-force participation rate, and they will continue to decline through 2016. The pace of decline will moderate when labor-force growth picks up; despite this headwind the unemployment rate should hit 6 percent in the second half of 2016.
Construction; Professional and Business Services;Trade, and Transportation sectors are expected to have the strongest average growth during 2013-2016.
Real Gross State Product (RGSP) will expand just 1.8 percent in 2013, then accelerate to 3.3 percent in 2014, and 4.1 percent in 2015 before easing to 3.4 percent in 2016. Average growth will be 3.2 percent during 2013-2016 compared to average growth of -0.6 percent over the preceding four years.
Real personal income growth for 2012 slowed to 1.3 percent. From 2013-2016, real personal income growth will average 3.4 percent, and will accelerate to 4.1 percent in 2015.
Florida’s population growth will accelerate in 2013 and beyond. By 2016, the growth rate will be at 1.7 percent, the fastest growth rate since 2006.
Retail sales will grow at an average pace of 3.7 precent during 2013-2016, after growing 4.6 percent in 2012.
Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.
Snaith also is a member of several national forecasting panels, including The Wall Street Journal Economic Forecasting Survey, CNNMoney.com’s survey of leading economists, the Associated Press Economy Survey, the National Association of Business Economics Quarterly Outlook Survey Panel, the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters, the Livingston Survey, Bloomberg U.S. Economic Indicator Survey, Reuters U.S. Economy Survey and USA Today Economic Survey Panel.
The Institute for Economic Competitiveness strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses. Through these analyses, the institute provides valuable resources to the public and private sectors for informed decision-making.