Florida will need a few more years to climb completely out of the hole left by the recession, but various economic indicators are gradually returning to typical growth levels, the Legislature’s research office said in its latest report.
Trends are positive for two key elements of Florida’s economy: Personal income growth is exceeding U.S. averages, while gross domestic product growth (the value of goods and services produced or exchanged), is advancing, though a little slower than the national average.
The Florida Legislaturecq Office of Economic and Demographic Research report released in December indicates the outlook for other factors shaping employment growth is improving, including population growth, tourism, and global and national economic conditions.
“The most important feature of our current economic condition is how close we are to full recovery and a return to normal conditions,” Amy Baker, coordinator of the nonpartisan research group said in an email Tuesday. “We aren’t there yet, but we can see it on the horizon.”
The legislatively mandated EDR forecasts of economic and social trends can be used in policymaking, revenue and appropriations decisions and can provide a deeper perspective than some accounts of economic performance.
For example, the EDR report pointed out the generally reported reduction in Florida’s unemployment rate from 9.4 percent in December 2011 to 6.7 percent this past October, a 2.7 percentage point decline. But if the workforce participation rate had held steady since December 2011, the unemployment rate would have been 8.3 percent. That’s because nearly 60 percent of the decline was due to people dropping out or delaying entry to the labor force, the EDR stated.
The report also cited the impact of the national economy on Florida’s performance, difficult dynamics to separate when credit and blame for economic conditions are assigned.
“The recovery in the national economy is well under way,” the EDR report issued in December said. “While most areas of commercial and consumer credit are strengthening, residential credit still remains sluggish and difficult for consumers to access but has shown recent improvement.”
Among the report’s major observations, drawn from U.S. Bureau of Economic Analysis and other federal, state and real estate industry sources:
Florida’s economic growth in 2012 was positive for the third consecutive year after two years of declines, with a 2.4 percent state gross domestic product growth rate, slightly below the national average of 2.5 percent. (The next gross domestic product report will be available in June.)
Florida’s 3.2 percent personal income growth rate in 2012 over 2011 was slightly below the national growth rate of 3.5 percent. Florida’s personal income dipped the first quarter of 2013, rose in the second quarter, and grew by 1.2 percent in the third quarter over the second quarter, the nation’s eighth-best growth rate, federal data show.
“The data from the last quarter of 2012, and the first and second quarters of 2013, was noisy because of people’s expectations regarding the ‘fiscal cliff’,” Baker said about the politically charged debate over federal budget issues and a forecast economic collapse that never materialized.
“I feel pretty confident that the third quarter data gives a good reading,” she said. “It shows the overall improvement in the economy, especially strong tourism and recovering population growth. In regard to the latter, more people leads to higher income, all else being equal.”
Florida’s job market will take a long time to recover, with about 445,800 jobs lost since the most recent peak. Rehiring, while necessary, will not be enough.
“It would take the creation of about 850,000 jobs for the same percentage of the total population to be working as was the case at the peak,” the EDR said.
Florida’s prime working-age population, aged 25-54, is forecast to add about 3,400 people a month, so the hole is deeper than it looks.
Florida’s average annual wage, which is typically below the U.S. average, further declined in 2012 to 87.7 percent of the national figure. Although Florida’s wage level increased in 2012 , the national wage increased more.
Population growth, the state’s primary engine of economic growth that fuels both employment and income growth, is forecast to continue to strengthen. The future will be different from the past: Florida’s long-term annual growth rate between 1970 and 1995 was more than 3 percent, while current projections estimate a 1.3 percent annual gain between 2013 and 2015 and 1.4 percent between 2015 and 2020.
Foreclosure activity remains daunting despite an 8 percent decrease in November from a year ago. Florida in November led the nation in the number of filings. It had the highest U.S. foreclosure rate and eight of its cities placed among the top 10 in the United States. Jacksonville ranked first nationwide and Tampa ranked eighth.
A turnaround in Florida housing will be led by low home prices that begin to attract buyers and clear inventory, long-term sustainable demand caused by population growth, and Florida’s demographics including the aging of the baby-boom generation, the report stated.
“Florida’s economic momentum is evident across the state,” Gov. Rick Scott said in an email addressing the EDR report. “It’s important that we continue to focus on creating an opportunity economy in Florida where every Floridian can find a great job.”
It’s important to look at a lot of different economic components, said Stuart Rogel, president and CEO of the Tampa Bay Partnership, an economic development agency serving an eight-county Tampa Bay region.
“I look less and less at unemployment rates, though it’s good to be moving in the right direction,” Rogel said. “I spend more time looking at state and regional gross domestic product.”
Rogel said he’s encouraged by improvements in Florida’s legacy industries — tourism, agriculture and construction — but the economy must diversify if income levels are to rise.
“Our focus has to be securing those kinds of jobs,” Rogel said, referring to regional gains in high-paying jobs in applied medicine and business finance and data services.
Rick Homans, president and CEO of the Tampa Hillsborough Economic Development Corp., said Tampa Bay was on a roll during 2013, with expansions, relocations, new international flights and expanded activities at the port.
“We can’t let up,” Homans said. “We need to step up our marketing. We have to focus additional efforts at workforce training, especially with regards to IT and manufacturing, because the quality of the workforce trumps every other site selection criteria.”
Homans said Tampa Bay has two huge opportunities beyond its target industries in life science, financial services, defense and manufacturing.
“Tampa Bay can position itself as the epicenter of the transformation of health care, and we can leverage our port, airport and manufacturing base to significantly expand international exports,” he said.
While Florida traditionally has relied on population growth for much of its economic gains, Pinellas County has only added 3,839 new residents from 2010 to 2012, said Mike Meidel, director of Pinellas County Economic Development, less than one-half of 1 percent growth.
“Therefore, we are focused on creating new high-wage job opportunities for our citizens in industries that bring new money into the local economy,” Meidel said. “These ‘target’ industries sell most of their products or services outside of the county and the sales proceeds are then used to pay local workers, who in turn go out into the community and buy goods and services from local businesses like restaurants, dry cleaners and child care.”
Manufacturers, financial services and information technology companies are examples of target industries in Pinellas, which has the second largest manufacturing employment base in Florida, with more than 30,000 workers.
“The average wage of workers in these target industries in Pinellas is $76,093, while the average for all workers is only $43,949,” Meidel said. “Pinellas County’s average wages have continued to grow throughout the recession.”