Florida’s next governor should focus on making state government “smarter,” not smaller, says a University of Central Florida economist.
“The new reality of slower population growth in Florida necessitates a more active involvement of state government to help spur other engines of economic growth,” said Sean Snaith, the director of UCF’s Institute for Economic Competitiveness, in his latest quarterly statewide forecast, released this morning.
Snaith also says Rick Scott or Alex Sink should expect to face double-digit unemployment rates through his or her first two years on the job. Snaith predicts rates may not fall below 6 percent until 2018 – which would be the next governor’s final year in office if he or she serves two terms.
There’s little the new governor can do to change the recession’s temporary aftermath, and Snaith says state leaders need to look at the “types of policies that will raise the potential output of Florida’s economy in the future” even if they don’t yield immediate returns.
Snaith recommends increased spending in infrastructure and transportation networks, such as ports and high-speed and commuter rails. He also suggests tax incentives for employers who fund their employees’ ongoing education and training.
“Given your corporate background, you know that a skilled workforce is a powerful attractant for businesses and will strengthen economic development efforts in the state,” he adds in his forecast’s “open letter” to the next governor. “This will also require a direct investment in our K-12 schools, community colleges and universities — an investment we have thus far been reticent to make. This kind of government spending pays dividends over time.”
Snaith’s full Florida forecast involves 12 metropolitan regions. Those areas are Naples, Daytona Beach-Deltona, Gainesville, Ocala, Lakeland, Palm Bay-Melbourne, Pensacola, Miami, Jacksonville, Tallahassee, Tampa Bay and Orlando.
The forecast is available on his website at http://www.iec.ucf.edu.
Highlights of his report include:
— Florida’s housing construction sector bottomed out in 2009 after a four-year plunge. Housing starts will climb, but more slowly than was expected as of last quarter’s forecast. In 2013, housing starts will recover to their 1997 levels, rising gradually to 138,800 annual starts.
— The sectors forecasted to have the strongest growth during 2010-2013 are professional and business services (3.9 percent); trade, transportation and utilities (2.6 percent); education and health services (2.3 percent); and manufacturing (1.3 percent).
— After two years of contracting, Real Gross State Product will expand 2.3 percent in 2010, 1.6 percent in 2011, 3.3 percent in 2012 and 3.6 percent in 2013.
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 is also a member of several national forecasting panels, including The Wall Street Journal Economic Forecasting Survey, CNNMoney.com’s survey of 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, Bloomberg U.S. Economic Indicator Survey and USA Today Economic Survey Panel.
The UCF Institute for Economic Competitiveness’ mission is to expand public understanding of the economy by convening business leaders, scholars, policy makers, civic groups and media to discuss critical issues.