Florida’s economy remains on track to a faster recovery — outpacing much of the nation in job and income growth — provided the Sunshine State can avoid more shutdowns, says Sean Snaith, nationally recognized economist and director of UCF’s Institute for Economic Forecasting.
Released this week, the institute’s third-quarter report forecasts Florida’s economy, as measured by real gross state product, will expand at an average annual rate of 1.5 percent from 2020-2023. After contracting by 2.4% in 2020, real gross state product will bounce back and rise by 4.9% in 2021.
Payroll job growth in Florida will continue to surpass national job growth as the labor market climbs out of the hole.
“Business payrolls were decimated by COVID-19 lockdowns,” Snaith says. “It will likely be 2021 before business payrolls in Florida exceed their pre-pandemic levels.”
The passing of Amendment 2, which will raise the state’s minimum wage to $15 by 2026, will have a mixed impact on lower-wage earners and small businesses.
“There will be winners and losers,” Snaith says. “Some workers may see an increase in pay while others may see their hours cut, benefits reduced or jobs lost. To put it in context, Publix offers ‘Buy one get one’, or ‘BOGO’, deals to sell more of those products. A lower price causes an increase in quantity demanded, economists call that the Law of Demand. Amendment 2 raises the price of less skilled labor, and this will cause the quantity demanded of this labor to decline.”
Year-over-year growth will average -0.6% in 2020 before increasing 5.6% in 2021, 2.6% in 2022 and 2.7% in 2023. Average job growth during the 2020-2023 period will be a 1.9 percentage points faster than the national economy.
Labor force growth in Florida will average 2.1 % from 2020-2023. After 2020, strong payroll job creation is expected to boost Florida’s labor market recovery. The improved prospect of finding a job will bring more Floridians back to the hunt for employment, including many who had dropped out due the lockdowns and recession.
“The task to lower the state’s unemployment rate will continue,” Snaith says, “but the state’s accelerating job creation will help.” The unemployment rate, which soared from 3.3% in 2019 to 8.5% in 2020, will fall to 5.5% in 2021, 3.5% in 2022 and 2.8% in 2023.
The sectors expected to have the strongest average job growth during 2020-2023 are Financial Activities (7.1%); Education & Health Services (6.5%); Trade, Transportation & Utilities (6.1%); Professional & Business Services (4.7%) and Construction (2%).
“The housing market appears to be immune to COVID-19,” Snaith says, noting that the tight market has fueled price appreciation and pushed median prices above the highs of the housing bubble. Housing starts are expected to pick up going forward, but not fast enough to ease the large shortage of single-family housing in the short run. Total starts will be 139,438 in 2020; 134,329 in 2021; 132,969 in 2022 and 133,853 in 2023. House price appreciation will slowly decelerate over this period as supply catches up with strong demand.
The forecast projects real personal income growth will average 1.3% during 2020-2023, starting with 3.3 percent growth in 2021, before accelerating to 2.3% in 2022, and then to 2.7% in 2023. Florida’s average growth will be 0.4% points lower than the national rate during that span.
In addition, retail sales are expected to grow at an average pace of -2.4% from 2020-2023, first contracting 6.6% in 2020 and again in 2021, then growing at an average rate of 4 % the next three years.
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 Forecasting 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.