Florida & Metro Forecast: Could Chicken Little Be Right This Time?
Chicken Little and his single acorn do not a recession make, says University of Central Florida economist Sean Snaith, but when acorns are raining from the sky, a recession may well be on the horizon for the United States. Among the acorn indicators Snaith references are the ones aimed directly at Florida’s economy–the Zika crisis, Brazilian recession, Brexit vote and Canada’s weakening economy.
“The top three countries of origin for international tourism in Florida—Canada, Brazil and the U.K.—are all facing significant challenges that are likely to impact the number of visitors and amount of visitor spending in Florida,” said the director for the Institute for Economic Competitiveness at the UCF College of Business in the latest Florida & Metro forecast.
The forecast notes that the U.K. health service advising against travel to Florida due to the risk of Zika likely will hit tourism in Central and South Florida particularly hard if young families choose to stay away. Add to that Brazil’s and Canada’s weakening currencies against the U.S. dollar, and Snaith says suddenly the cost of vacationing in Florida is less appealing.
With China’s economic slowdown and the ongoing unresolved Greek debt crisis, Snaith says the nation’s economy could be in for a hard landing.
On the bright side, he says, Real Gross State Product or real state GDP growth in Florida is expected to grow at a faster pace than we are forecasting for U.S. Real GDP growth over the next four years and payroll job growth continues to outpace national job growth.
Labor force growth in Florida is expected to average 2 percent through 2019, according to the forecast. The improved prospects for success will put more Floridians back on the hunt for employment while attracting out-of-state job seekers, but that combination will make lowering the state’s unemployment rate more challenging, Snaith says. The unemployment rate is forecast to hover at about 4.7 percent in 2017, then gradually increase through 2019.
Although housing prices have been rapidly rising, it is still not enough to lift 14 percent of Florida’s mortgage holders above water in their home loans. The median sales price for single-family homes increased $23,239 in July 2016, year over year, and now stands at $223,238.
The pace of housing starts are expected to increase but not fast enough to meet growing near-term demand for single-family housing. Total starts will be 114,100 in 2016, 138,000 in 2017, 151,200 in 2018, and 156,900 in 2019.
The sectors expected to have the strongest average job growth during 2016-2019 are Construction (4.9%), Professional & Business Services (3.7%), Leisure & Hospitality (2%), Education & Health Services (2%), and Trade, Transportation & Utilities (1.8%).
Real personal income growth decelerated after 2015 and will average 3.5 percent from 2016-19, with 3.8 percent growth in 2015 easing to 3.5 percent growth in 2019. Florida’s average growth will exceed the national rate by 0.5 percentage points over that four-year span.
Boosted by the strong recovery in Florida’s labor market and rising home values, retail sales will grow at an average pace of over 4.5 percent during 2016-2019.
For the full forecast, visit here.
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.
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.