National Economic Policy a Downdraft for Florida's Growth
Today’s wobbly federal economic policies may be considered just as much slapstick as the 1980 comedy Airplane!, but off the big screen, the joke is on Florida.
In his state economic outlook for 2014-2017, University of Central Florida economist Sean Snaith expects the economy to grow less than 3 percent despite promising signs that might otherwise indicate more improvement.
Factors such as population growth, the rebounding of the housing market, speedy job growth and unemployment rates below the national average should signal that Florida is flying higher. But economic policies that create more problems than they solve are a downdraft on the state’s economy, Snaith says.
“Forgive me if I do not raise a toast to the start of a new phase of robust growth in the U.S. economy that is here to stay, to a long-awaited period of actual recovery that will lift all boats with its rising tide of prosperity,” said Snaith. “I’ve seen this movie before and that is not what follows this current scene of positive economic data reports.”
“I know the villain awaits us in 2014 and the uncertainty of the Affordable Care Act, Dodd-Frank regulatory reform and what path the Fed will follow as it unexpectedly took its first step in its taper of bond purchases in December are a cabal conspiring to suck out the wind that currently is providing the economy with its lift.”
Snaith says policy uncertainty is likely lasting, although the deal to avoid a government shutdown, and a 4.1 percent growth rate for real GDP in the 3rd quarter of 2013 indicate promise.
“These are all positive developments, but they do not negate the remaining sources of policy uncertainty, and we have seen in this recovery bursts of economic activity that ultimately give way to a return to subpar growth,” Snaith said. “If the Sunshine State were free from the restraints of policy uncertainty that will remain in place in 2014, growth would undoubtedly be much more robust.”
For the complete Florida forecast, click here.
Other highlights from the report include:
- Florida’s housing market enters 2014 in a delicate condition as new regulations kick in, interest rates rise and the number of cash investors falls.
- Payroll job growth year-over-year is expected to average 2 percent in 2014; 2.2 percent in 2015; 2.2 percent in 2016; and 1.9 percent in 2017. It likely will be late 3rd quarter 2016 before payrolls recover to their pre-recession heights.
- Unemployment rates have fallen from their peaks, a trend that will continue through 2017.
- Underemployment in Florida, a broader measure of labor-market weakness, came in at 14.6 percent for the third quarter of 2013, down from 15.1 percent from the previous quarter.
- The sectors expected to have the strongest average growth over the next three years are construction, professional and business services, trade, transportation and utilities, education, health services and information.
- Retail sales are expected to grow at an average pace of 4.2 percent over the next three years.
Snaith is the director of UCF’s Institute for Economic Competitiveness. He 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.