August 2022 – “Objects in this mirror are farther than they appear.” – Anonymous
In Florida, searches for the word recession peaked from July 12–18[i]. At Florida State, economist Dr. Jerry Parrish believes that there is a 67% chance of a recession in Florida later this year or early 2023[ii][iii]. Here we go behind the views, trending topics, and hype to look at the data.
The July 2022 Economic Estimating Conference – Florida Economy report was just published[iv]. This biannual report is prepared by the Office of Economic and Demographic Research (EDR)[v]. For each variable (i.e., GDP, personal income, and unemployment), EDR forecasts two values: Over-the-quarter (OTQ) and over-the-year (OTY). OTQ refers to changes from one quarter to the next. For example, Florida’s economy (real GDP) is expected to grow 1.9% in the period October–December 2022 (Q4 2022). More plainly, in December 2022, economists expect 2% more economic activity than in September 2022. OTY refers to changes over a year for a specific quarter. For that same period, Florida’s economy is projected to grow 0.1%. By December 2022, the state’s economy will be only 0.1% larger than in December 2021.
As seen in Figure 1, EDR is not expecting a full-blown recession but a brief slow down. After a weak fourth quarter (October–December 2022), the economy should regain its stride and grow around 2% through June 2025.
Figure 1. Projected Florida Real Gross Domestic Product Growth from July 2022 through June 2025
In terms of consumption, EDR does not forecast total consumption. However, it does forecast three consumption-driven activities: Housing starts, new light vehicle registrations, and total visitors. Two of these consumption proxies are expected to slow down significantly or decline in the forecast period: Housing Starts and New Vehicle Registrations. These two are key sectors in Hillsborough County. As seen in Figure 2, private housing starts declined from August 2022 through March 2024. Hence, new housing inventory is expected to remain limited through June 2025. Similarly, as seen in Figure 3, growth in vehicle registrations is expected to slow steadily through June 2025. If you will be trading in your current vehicle in the near term, you may find higher prices and potentially limited selections.
Figure 2. Projected Florida Total Private Housing Starts
Figure 3. Projected Florida Total New Light Vehicle Registrations
The last consumption proxy is total visitors. Its projected growth trend is congruent with the projected growth in Florida’s GDP (Figure 1). Quarterly visitor totals are expected to grow around 4% through June 2025 (Figure 4). As Tampa Bay is amongst the most popular tourist and convention destinations in Florida, this is excellent news for us.
Figure 4. Projected Total Visitors to Florida
Projected growth of personal income, employment, and unemployment belie a potential recession. As seen in Figure 5, personal income is expected to grow steadily through June 2025.
Figure 5. Florida Personal Income
The unemployment rate only includes those out of work and still looking for work. Unemployment is expected to remain around 4% for the forecast period (Figure 6). This is slightly higher than the 3% percent registered in April–June 2022 (Q2 2022). Low unemployment tends to push up wages and convinces those folks that have given up looking for work to restart looking for jobs.
Figure 6. Florida Civilian Unemployment
Employment is the opposite side of the coin. Low projected unemployment implies high projected employment. As seen in Figure 7, employment is projected grow inexorably from 9.3 million to 9.7 million jobs by June 2025.
Figure 7. Florida Non-farm Employment (in thousands)
To conclude, some experts expect a recession later this year or early next year. However, EDR’s Economic Estimating Conference offers an alternative view. From January 2023 through June 2025, Florida’s real GDP is expected to grow around 2%. A recession is still possible but not at all certain.
[ii] Dunkelberger, Rosanne. “Economist Predicts Florida will see a recession this year”. Florida Politics. Link: https://floridapolitics.com/archives/540228-economist-predicts-florida-recession/
[iii] Parrish, Jerry. “RE: Recession in Florida”. Email to Yassert Gonzalez. 01 August 2022.
[iv] Economic Estimating Conference – Florida Economy. July 22, 2022. http://edr.state.fl.us/Content/conferences/fleconomic/index.cfm. Last Revised: July 22, 2022. Last accessed on August 1, 2022.
[v] The Office of Economic and Demographic Research (EDR) is a research arm of the Florida Legislature principally concerned with forecasting economic and social trends that affect policy making, revenues, and appropriations. http://edr.state.fl.us/Content/