The Sunshine State is on the cusp of a recession — if it hasn’t already started — says prominent University of Central Florida economist Sean Snaith. Fortunately, the impact won’t be anything like Floridians saw in 2020 or the housing collapse of the late 2000s.
“Florida can’t escape a recession,” says Snaith, the director of UCF’s Institute for Economic Forecasting. “But we won’t suffer like we did during the previous two. If Florida’s economy had been a hospital patient during 2020 or in 2008-09, its condition would have been somewhere between serious and critical. This time around, it will be good or stable — and probably even closer to good.”
In his latest quarterly Florida and Metro forecast, released this morning, Snaith predicts the recession may even yield some relief for residents and businesses, such as an end to the rapid rise in housing costs and alleviating supply chain woes on everything from automobiles to appliances.
One benefit we’re already seeing, Snaith says, is a decline in oil and gas prices, which when coupled with sky-high housing and food prices have been a severe strain on Floridians’ budgets.
The ‘Pasta Bowl Recession’ and Inflation
Even January’s surprising jobs numbers don’t preclude an economic slowdown, Snaith says.
While Florida’s already-strong labor market is poised to strengthen in light of the latest U.S. employment report, Snaith continues to predict his “Godfather”-esque “Pasta Bowl Recession,”which he defines as a shallow slide into—and eventually a gradual climb out of — a recession. (Think back to Snaith’s 2009 gravy boat-shaped recession metaphor, but this time wider with flatter curves.)
This new tableware-shaped recession will actually help the Federal Reserve in its fight to bring down inflation.
“It means the Fed will not have to raise interest rates as high as they otherwise would if the economy was still growing at the pace that it was in 2020 and 2021 when inflationary pressures were much stronger,” Snaith says. “The result is that the trade-off we would typically see between lower inflation and higher unemployment rates won’t be as large as it historically has.”
Some additional highlights from Snaith’s latest four-year Florida forecast include:
- The impact of the “Pasta Bowl Recession” in Florida will continue to slowly manifest as 2023 progresses. There will not be large payroll job losses or very high unemployment rates as in the previous two recessions, but this mild recession will impact the labor market starting in 2023 and continuing into 2024.
- From 2023-26, Florida’s economy, as measured by Real Gross State Product, will expand at an average annual rate of just 0.6%. However, Real Personal Income Growth will average 2% during 2023-26, and Florida’s average growth will be 0.3 percentage points higher than the national rate over the next four years.
- Labor force growth in Florida will average 0.8% from 2023-26. After growing 3% in 2022, Florida’s labor force growth will decelerate because of the recession in 2023-24, then accelerate in the final two years of our forecast.
- Florida’s unemployment rate fell to 4.6% in 2021 and then to 2.9% in 2022. The recession will push up the rate to 4.6% in 2023 and to 5.8% in 2024 before easing slightly to 5.4% in 2025 and 5% in 2026.