The U.S. economy is headed for a pasta-bowl shaped recession, and Florida can expect to follow suit with a shallow, year-long recession of its own, says Sean Snaith, national economist and director of UCF’s Institute for Economic Forecasting.
“The pasta bowl recession in Florida will not be pleasant like a trip to Olive Garden,” says Snaith, returning to the kitchen for his latest recession descriptor after coining the term ‘gravy boat recession’ in 2009, “but there will be several benefits of an extended period of slower economic growth.”
Florida’s economy, as measured by Real Gross State Product, is expected to expand at an average annual rate of 1.4% from 2022-2025. Although it will not contract during the recession, growth will slow to 0.5% in 2023 and 2024 before accelerating in 2025.
Labor force growth in Florida is forecasted to average 1.4% from 2022-2025. After growing 2.5% in 2022, Snaith says, Florida’s labor force growth will slow from 2023-2024 before mildly accelerating in 2025.
Payroll job growth in Florida will begin to falter during the recession but not in every sector, Snaith says. After year-over-year growth of -4.9% in 2020, the labor market rebounded to 4.6% in 2021. With job growth expected to be 3.9% in 2022, the payroll employment will contract by 0.6% in 2023 and by 1.3% in 2024 before expanding 0.8% in 2025.
The unemployment rate that jumped from 3.3% in 2019 to 7.9% in 2020 fell to 4.8% in 2021 and will fall to 3.6% in 2022. The recession is expected to push up the rate to 4.9% in 2023 and to 5.8% before easing slightly to 5.7% in 2025.
Real personal income growth will average -0.7% during 2022-2025. Following a pullback in 2022, growth will average 1.7% through the end of the 2025 hitting 2.5% in that year. Florida’s average growth will be 0.5% higher than the national rate over that four-year span.
Housing starts will pick up going forward, Snaith forecasts, but not nearly fast enough to offset the large shortage of single-family housing in the short run. Total starts, which jumped from 156,762 in 2020 to 190,061 in 2021, will rise to 191,593 in 2022 before decelerating to 166,461 in 2023 and 161,911 in 2024. Total starts will tick up to 162,871 in 2025. Rapid house price appreciation will largely vanish over this period as supply catches up with demand tempered by rising mortgage rates, decreasing affordability and recession.
For the complete Florida & Metro Forecast, now including all 22 of Florida’s metropolitan areas, visit business.ucf.edu/centers-institutes/institute-economic-forecasting/
The Institute for Economic Forecasting strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses.
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.