2008 was a lackluster year and Florida's CEOs project 2009 will be similar or worse.
Slowing population growth creates economic drag
Another factor now exerting a drag on Florida’s economy is a slowdown in the state’s rate of population growth. This is normal; Florida’s population growth tends to rise and fall with the economy. But growth fuels construction, real estate sales and other industries, so recessionary slumps in population growth make Florida’s economic downturns all the more painful.
At least since the 1970s, national economic recessions have been associated with declines in Florida’s population growth. The chart on page 98 shows the annual net population increase in Florida from 1971 through 2008. Recessions occurred in 1973-1975, 1980-1982, 1990-1991 and 2001. Between 1971 and 2008, Florida’s growth ranged from a high of almost 500,000 new residents per year to a low of roughly 125,000 new residents.
Annual Net Increase
|Source: Bureau of Economic and Business Research; Florida Statistical Abstract|
|The most recent demographic estimates (adopted in October 2008) show projected growth in 2009 is 298,300.|
The most recent growth surge began in 1993 as the U.S. economy emerged from the recession of 1990-1991. Over the course of the next 12 years, population growth in Florida ratcheted up, reaching almost 450,000 net new residents annually in 2004. By 2006, however, growth had dropped to about 330,000 net new residents per year.
Florida relies on a group of state economists and demographers to develop a consensus estimate of population growth and economic activity to forecast state revenues. Growth for 2007 was estimated to be 331,234 net new residents. The most recent demographic estimates and projections were adopted in October 2008 and show projected growth for 2008 to be 126,735, with growth of 74,686 projected for 2009.
In reality, though, population growth may be dropping even further and faster than has been estimated thus far. To gauge population trends, the Bureau of Economic and Business Research at the University of Florida monitors monthly changes in the number of electric hookups in the state. In September 2008, the number declined for the first time since BEBR began tracking electric service 40 years ago.
Demographers expect Florida’s population growth to rebound as the Baby Boom generation enters retirement. The oldest Boomers reached age 62 in 2008, and each year for at least a decade the number of Baby Boomers turning 62 will increase. In the near term, however, the anticipated tsunami of retirees may not materialize if the financial crisis and stock market declines of 2008 cause Boomers to delay retirement.