F l o r i d a Su m m a r y
Gross State P r o d uct Real Gross State Product (RGSP) in Florida, also known now as State GDP, the state-level analogue to Real GDP, started to grow again in 2010 after two years of sharp contraction as the recession lost its grip on the state. Growth was modest in that first year of recovery and became even more so in 2011, with full year growth of just 0.5%. To put that growth in perspective, in 2002-2006 Real GSP grew at an average rate of 4.7% with 2005 being the peak year for growth as the economy then grew at an eye-popping pace of 6.2%. Economic growth in the state has been more eyewatering than eye-popping for the first few years of this recovery. The year 2012 will be an improvement over the previous two years, but just marginally so. We expect the economy to expand at 1.6% this year. This is an improvement, but hardly qualifying as robust. In 2013, confidence and a growing labor market recovery should both be back in place allowing for stronger growth of 2.3%. These factors should finally create some Florida-like growth in 2014, 2015, and 2016 when Real GSP is expected to grow 3.3%, 4.0%, and 3.6% respectively. In most cases, the burden of lost housing wealth Florida’s consumers have to overcome is substantially higher than consumer’s burdens in other states around the nation. While housing prices have shown signs of stabilizing, if not showing some slight upward movement, the damage to Floridian’s balance sheets has been profound. Realistically it will take many years, if not a decade or more, to claw back that wealth. Thus, the scars of this recession and housing bubble will be with us for a long time to come as both a reminder of and an impediment to the growth we once enjoyed and would like to experience again. However, as 2012 gives way to 2013, Florida’s economy will begin to grow more rapidly, labor markets will improve, and housing prices will benefit from both of these improving fundamentals. Economic and demographic growth will provide a solid foundation upon which a healthy housing sector can once again grow. Rising housing prices will in turn feed back into the economy via wealth effects and help the labor market continue to improve - a virtuous cycle that will finally supplant the cruel interaction of these two markets during the past five years. Nominal Gross State Product is expected to reach 8
Florida & Metro Forecast - December 2012
nearly $957 billion in 2016. The state will cross the trillion-dollar threshold for nominal GSP in 2017. The size of Florida’s economy as measured by GSP will have doubled in size from 2001 to 2017. Favorable demographics, specifically faster rates of domestic and international migration, will continue to fuel the state’s growth. In addition to population growth, international trade, tourism, healthcare, and ongoing efforts to diversify the state’s economic base in life sciences will all help broaden the economic base of the state and provide additional sources of economic growth helping to push the economy forward in the years and decades to come.
P ers o nal Inco m e, Retai l Sales , and Auto Sales Personal income growth quarter-over-quarter continued to decelerate into the first half of 2012 in Florida, after doing so for all of 2011. Growth is expected to accelerate in the second half of 2012, and then waver again in the first half of 2013. Going forward, momentum will build in the second half of 2013 and be maintained through the end of 2016. Year-over-year growth lost a bit of speed in 2012, but personal income growth will build in 2013 with growth of 4.3%, will pick up more steam in 2014 when it is expected to grow 5.6%, and then will accelerate further in 2015 and 2016 when growth will average 5.8%. Personal income growth in Florida will lag behind that of the nation as a whole in 2011 and 2012. But in 2013, the year we are calling the crossover year, the positions reverse, and Florida outpaces the nation with personal income growth that is an average of 0.7% higher than the national rate through 2016. Personal income growth during 2013-2016 will average 5.4%; during the preceding four years that average growth rate was just 1.4%. Personal income will reach nearly $961 billion in 2016 - a year that will see personal income grow by $52.9 billion. Real disposable income growth, weighed down by the Great Recession and the slow pace of recovery, increased by just 1.0% in 2011. In 2012, disposable income growth will average 1.2%. Average growth during 20132016 will be a more robust 3.6%. Increasing tax burdens at the federal level will be a drag on disposable income over the forecast horizon and beyond. Addressing the nation’s deficit and debt problems cannot be achieved through spending cuts alone and will necessitate higher tax burdens for more than just the wealthy.