Like a double shot of espresso, the incoming Donald Trump administration’s economic policies should provide a “turbo boost” to Florida’s economy, says University of Central Florida economist Sean Snaith in his most recent economic forecast for the state.
“A double-barreled fiscal policy and, in particular, a regulatory rollback of the Affordable Care Act and Dodd-Frank financial regulatory reform law will help the Sunshine State’s economy grow even faster,” said Snaith, director of the Institute of Economic Competitiveness at UCF’s College of Business. “Trump’s proposed tax reform, corporate tax cuts and $1 trillion infrastructure spending plan will help lift real Gross Domestic Product growth toward 3 percent in a recovery that for seven and a half years has not been able to sustain growth much faster than 2 percent.”
The president-elect’s tax reform proposals include reducing the number of income tax brackets, providing every income level with a tax cut and closing special interest tax breaks. In addition, the plan would seek to cap the level of deductions for single and married filers while increasing standard deductions.
“Together, these changes would eliminate the need for many taxpayers to itemize deductions, thus reducing the burden of filing income taxes for most taxpayers,” Snaith said.
Florida’s economy has outpaced the national economy since 2012 for job growth and 2013 for GDP growth. As federal policy shifts under Trump, Snaith said he expects it to accelerate growth in Florida and push the state even further ahead of the national economy.
The report projects that from 2016-19, Florida’s economy, as measured by Real Gross State Product, will expand at an average annual rate of 3.7 percent, about 1.2 percentage points faster than the forecast average for U.S. Real GDP growth over the same period.
Payroll job growth in Florida also is expected to continue to outpace national job growth. Florida job growth is expected to average 3.2 percent in 2016, 2.8 percent in 2017, 2.1 percent in 2018 and 2.2 percent in 2019 for year-over-year growth. Average job growth from 2016-2019 will be 1.1 percentage points faster than the national economy, according to the forecast.
Consistent robust payroll job creation has bolstered Florida’s labor market, and improved prospects for success will put more Floridians back in the hunt for employment while attracting out-of-state job seekers.
That combination, Snaith said, will make the task of lowering the state’s unemployment rate more challenging, but the unemployment rate should fall to 4.5 percent in 2017, 4.4 percent in 2018 and 4.0 percent in 2019. The sectors expected to have the strongest average job growth during 2016-19 are Professional & Business Services (5.8 percent), Construction (5.2 percent), Financial (2.4 percent), Leisure & Hospitality (2.3 percent), Education & Health Services (2.2 percent), and Trade, Transportation & Utilities (2.1 percent).
After plateauing in 2013-14, the pace of housing starts now is expected to increase, Snaith said, but not fast enough to meet growing near-term demand for single-family housing. Total starts are expected to be 111,700 in 2016, 128,800 in 2017, 146,400 in 2018 and 160,400 in 2019. According to the forecast, house-price appreciation should decelerate over this period as supply catches up with demand.
Real personal-income growth, which decelerated after 2015, is expected to average 4 percent during 2016-19, with 3.4 percent growth in 2016, rising to 4.3 percent growth in 2019. Florida’s average growth will exceed the national rate by 0.8 percentage points during that four year span. In addition, retail sales are expected to grow at an average pace of over 6.3 percent during 2016-2019.
For the full forecast, visit: https://issuu.com/ucfbusiness/docs/ucf_flmetro_forecast-dec2016-secure
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.