Florida & Metro Forecast: Tax Reform to Bolster Growth, Encourage In-Migration
The Tax Cuts and Jobs Act has been called the most radical, comprehensive reform of the nation’s tax code in decades and it will also be a major boon for Florida’s economy, according to University of Central Florida economist Sean Snaith.
While consumers and companies across the United States are likely to reap the benefits of tax reform, Snaith anticipates additional growth in Florida due to the provision in the law regarding deductions for state and local taxes.
“Specifically, the provision in the law that caps deductions for state income, sales and property taxes at $10,000 will make Florida an even more appealing destination for in-migration,” Snaith says in the quarterly Florida & Metro Forecast from the UCF Institute for Economic Competitiveness, pointing out the deduction had no limit before the change.
The latest forecast shows Florida’s economy, as measured by Real Gross State Product, outpacing U.S. growth over the next four years. Snaith foresees expansion at an average annual rate of 3.6 percent from 2018 to 2021. Real Gross State Product is additionally projected to expand by 3.7 percent this year and 4.3 percent in 2019 before easing to 3.5 percent in 2020 and 2.8 percent in 2021.
As overall housing availability continues to decline, Snaith said prices are rising to values reached during the real estate bubble. Housing starts will accelerate, but not fast enough to alleviate the shortage of single-family housing in the short term, according to Snaith. Total starts are anticipated to reach 138,752 in 2018;154,911 in 2019; 171,754 in 2020, and 180,855 in 2021. Growth will be more rapid in the single-family space.
“Low inventories of existing homes for sale and sputtering housing-starts growth have contributed to an environment where home prices continue to rise at a hurried pace.” Snaith said, “The shortage in the single-family market will be rectified as the pace of single-family housing starts ramps up over the next several years.”
Consistently strong payroll job creation continues to characterize Florida’s labor market, according to Snaith. Labor-force growth in Florida will average 1.8 percent from 2018 to 2021. The sectors expected to have the strongest average job growth during that period are Construction (6.3 percent), Professional & Business Services (5.2 percent), Financial (2.5 percent), State & Local Government (1.4 percent), Trade, Transportation & Utilities (1.4 percent) and Manufacturing (1.3 percent).
Snaith said retail sales will grow at an average pace of over 5.5 percent during 2018 to 2021, boosted by a stronger national economy, tax cuts, continued strength in Florida’s labor market and rising household wealth.
For the full forecast, visit: https://issuu.com/ucfbusiness/docs/fl_metro_forecast_march_2018.