Florida’s economy is expected to remain strong for the next three years, boosted by steady population growth and healthy tourism.
The good economic news for the Sunshine State came through its annual financial checkup Tuesday morning at the Florida Chamber of Commerce Insurance Summit, taking place in Orlando. Providing the update was a presentation by Safety Net Hospital Alliance of Florida Executive Director James Zingale, who leads the company’s research and fiscal analysis division.
Introducing Tuesday’s conference was Chamber CEO Mark Wilson, beginning with a brief overview of the Florida insurance industry.
As the world’s 18th largest economy, Florida supports an insurance industry with 200,000 jobs, providing $700 million in annual tax revenue. The state’s population expects to grow another 6 million people by 2050, Wilson said.
Zingale began his presentation with an overview of Florida’s economy in an international context, highlighted with some surprising data about the relative strength of global economics.
“Florida and the U.S. economy are doing ‘pretty good,” he said.
Although the United States is the world’s largest economy, based on gross national product, it is, in fact, the European Union that enjoys the largest economic market, even larger than China.
When taking into account each member – Italy, Portugal and Ireland, for example – the EU becomes a global powerhouse on spending and buying power. Other emerging markets of particular interest to Florida were Mexico, the world’s 15th largest economy, and Canada, which comes in at 11th. China, India, Indonesia are also among the world’s fastest growing markets – something the watch for Florida’s economy with regards to tourism, Zingale said.
On a state and international level, Zingale predicted no recession for the next three years, with Florida’s reserves flush, bolstered by a strong influx of new residents and tourists.
He also forecasts the Florida Legislature, at least as far as the budget, will have an “easy session” in 2016.
Florida, as is the nation, is facing one of the longest stretches of economic growth since the end of the Great Recession.
“We are in a six-year four-month recovery,” Zingale said. “That makes this the fifth longest recovery of all time.”
“The state is growing,” he said to applause. “We have recovered.”
However, he added that the rosy numbers will lead some to start thinking about the next recession, although Zingale was careful to point out he is not predicting one. He also warned of a few “black swans” – unexpected events that serve as outliers – that could occur.
Zingale next touched on demographics, and how they relate to Florida’s economic strength. Starting with a short history lesson, he discussed how during World War II, the U.S. was fortunate enough to experience one of the lowest rates of population decline, since the war was fought overseas.
For those reasons, as well as the postwar baby boom, Florida experienced huge growth, settings the stage for its current economic outlook. These conditions – the lack of in state income tax and annual net migration of as many as 270,000 people – led to nearly four decades of consistent economic growth.
Nearly two-thirds of Florida’s population growth in the next two decades, Zingale said, will come from people 60 years and older.
He noted that Florida’s income growth is roughly equal to the national average, while its employment growth — primarily because of its reputation as a “retirement” state – has lagged behind the national average. The wage average is only at 87 percent of the nation as a whole, even as unemployment is below the national average.
In Florida’s construction sector, Zingale said the state document stamp tax revenues show positive growth, with a “really strong uptick.”
Florida has also returned to its historic average of homeownership, about 64 percent, from a high a decade ago in the mid 70 percent.
Much of Florida’s property tax has been rebounding since the Great Recession and has been growing since September 2010. Currently, there is a forecasted $29.9 billion in property tax for the upcoming year.
Even after backing out legislative “wish lists,” Zingale pointed out the state will still have more than $200 million in reserves. Florida’s budget has enough money fund everyone’s agenda with as much as $1.8 billion in discretionary funds left to spend, he added.
Zingale finished with the most optimistic numbers of the morning – an expected $3 billion in state reserves for next year, the highest amount in more than 15 years.