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Florida Economy Report - Mid 2008

Examining Florida

The good news, according to the University of Central Florida’s Institute for Economic Competitiveness: The U.S. will begin recovering from its “mild” recession right about now. The bad news, the institute predicts in its “Florida & Metro Forecast: 2008-2010”: A severe housing slump statewide will delay Florida’s recovery.

Among the report’s predictions:

Housing

» Florida’s housing market will bottom out this quarter. Housing starts will hit half of their 2005 peak in 2010 — or at the level they were at the start of the decade.

» The construction sector won’t begin adding jobs again until 2010.
Jobs

» Employment is expected to shrink 0.1% this year, grow 0.8% next year and get back on track with 2.1% growth in 2010.

» High-growth job sectors over the next two years include professional and business services, up 3%; education and health services, with a 2.4% gain; and transportation, warehousing and utilities, up 1.2%.

» An additional 10,500 manufacturing jobs in Florida will be lost over the next year and a half. The sector employed 466,000 in 2000. By 2010, manufacturing will shrink to 363,000 jobs.

» Unemployment — in the 4% range in 2005 and 2006 — is expected to gradually rise to 5% this year. It will begin its descent in 2010 after stabilizing at about 5.3% next year.

Retail Sales

» Overall this year, retail spending will grow 2.3%, the slowest since 2001. Tax rebate checks will provide a temporary boost this quarter, but then sales will drop through the second quarter of next year. From 2009-10, retail sales growth will average about 5.7%.

» New-vehicle registrations — an indicator of in-migration — will grow slowly next year but still only hit 1996 levels.

Gross State Product

» The state’s economy will grow 1.1% this year, 2.6% next year and 4.2% in 2010 — above the projected average national growth rate of 2.1% over the same time. GSP grew 5% last year.

» Florida will become a trillion-dollar economy by about 2013.

Income

» Personal income growth — 6.2% last year — will be 4.5% this year and 3% next year. It will creep back up to 5.1% in 2010.

In addition to its predictions, the report offered a critical view of the state’s policymaking approach:

“Sometimes policy is proposed and voted on without any economic analysis at all. Florida’s economy is too big and is growing increasingly more complex to continue to make economic policy through trial and error. ... It’s time to grow up, Florida; you can’t run a soon-to-be trillion-dollar economy like a mom & pop corner store.”