FLORIDA SUMMARY
the fastest growing housing markets around the state. Government budget deficits led to job losses in this sector that persisted for six years, from 2009 through 2014. Despite growing tax revenues, that prolonged budgetary crisis has kept spending growth modest and employment growth subdued.
to intensify as Treasury rates climb, along with the Fed’s increases in the federal funds rate; expected higher rates of inflation and a Trump administration poised to reflate annual budget deficits.
Hurricane Irma is already placing a strain on the state budget, one that is likely to grow as recovery continues and sales tax revenue takes a hit from the tourism sector.
The unemployment rate in Florida has continued to drop from its recession-driven peak level of 11.2% in January 2010 and stands at 3.6% as of October 2017. After five years well above the national rate of unemployment, Florida’s October 2017 unemployment rate is 0.5 percentage points below the national unemployment rate.
As Florida’s population and economy continue to grow, the demand for state and local government services grows as well. To meet this demand, growth in state and local government employment will be necessary, but will not rise to the levels seen during the housing boom. In the near term, the fiscal impact of Hurricane Irma will put a chill on hiring. Average job growth in state and local government during 2017-2021 will be 1.3%, with annual growth rising to 1.5% in 2018 and 1.7% in 2019. The 2018-2019 growth rates are expected to be the fastest since before the recession. On the other hand, the outlook for Federal Government employment growth in Florida will begin to worsen over the near term forecast horizon. Average job growth in the Federal Government sector in Florida will average 0.9% during 2017-2021, with growth turning negative in 2021, following the temporary hiring surge during the census year in 2020. Any long-term solution to our federal deficit and debt problems will involve additional revenue, but ultimately cuts in discretionary federal spending will be needed and entitlement programs, which continue to consume an increasing piece of the federal revenue pie, will have to be reformed. The proposed fiscal policies of the Trump administration, tax reform, and a possible infrastructure spending bill, will exacerbate the national debt situation over the next four years. As the Federal Reserve begins to move more quickly with interest rate hikes, the burden of servicing a national debt that is currently more than $20.57 trillion and poised to go higher will require a larger share of federal tax revenue. The pain of running four years of trillion-dollar deficits has been dampened by historically low interest rates on Treasury Bonds. That pain is going
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Florida & Metro Forecast / December 2017
UNEMPLOYMENT
Florida’s labor force participation rate in October 2017 stood at 59.4%, which is up from 56.3% one year earlier. The national labor force participation rate stood at 62.7% in October 2017, which is down 0.1 points from October 2016. This is the lowest level for the national labor force participation rate since February of 1978 and is down 3.3 percentage points from the start of the recession. The labor force participation rate is calculated as the percentage of the population aged 16 and older who are counted as participating in the labor force. The number of retirees in that population, who are obviously older than sixteen, but who no longer are working or seeking work, push down the overall labor force participation rate. Some of the decline in the labor force participation rate, but certainly not all of it, can be attributed to the aging of the Baby Boomer generation. The relatively higher share of the population in Florida who are of retirement age explains why the state’s labor force participation rate is lower than the national rate, and the continued migration of Baby Boomer retirees to the Sunshine State should continue to weigh on the participation rate. In October 2017, Florida’s population over the age of sixteen grew by 307,000 year over year, while its labor force grew by 216,000. We are forecasting strong economic growth in Florida over the next several years as well as continued growth in payroll jobs. This faster economic and job growth will generate a more rapidly growing labor force, making additional progress in reducing the unemployment rate