UCF economist: Florida has a ‘Teflon economy’ for the next recession

While the timing of a national economic slowdown doesn’t appear to be changing, Florida’s economy should weather it well – and even grow, says economist Sean Snaith.

In his latest quarterly Florida forecast, Snaith says the impact of a slowdown will not linger on Florida as in previous recessions.

“Florida’s economy is now more like Teflon. Many of the effects of a national slowdown will simply fade away,” says Snaith.

While the 2008-2009 housing collapse and pandemic hit Florida’s economy particularly hard, Snaith says the next slowdown or recession won’t do as much damage because of the state’s ever-growing population and strong job market.

“A recession is never good news,” he says. “But compared to what our state has endured during the last two recessions, any pain we endure will be far less severe and will not last as long. And Florida’s economy will not experience the worst of a national economic slowdown.”

For Florida – and the rest of the country – Snaith predicts a slowdown through late 2023 and early 2024, but it is unclear whether that slowdown will reach recession levels.

The housing struggles continue

The downside of Florida’s growing population and strong economic growth means continued shortages in the state’s real estate market, Snaith says.

“We’ve had the fastest growing population growth in the country, fueling demand for housing, and we’re running headlong into depleted supply,” he says. “This is not a path to affordability.”

Snaith doesn’t predict a drastic correction during the upcoming downturn or recession and has seen prices stabilizing in recent months, but that doesn’t mean home prices will fall for potential buyers any time soon.

“Demand doesn’t seem to be slowing down and it’s taking time for supply to catch up,” he says. “This will remain an issue for the foreseeable future.”

Other highlights from Snaith’s four-year economic forecast for Florida and the metro areas include:

• From 2023 to 2026, Florida’s economy, as measured by real gross state product (GNP), will grow at an average annual rate of 1.5%. Real GSP will slow during the economic slowdown as growth slows to 0.5% in 2024 and 0.8% in 2025 and then accelerates to 1.7% in 2026.
• Florida’s labor force growth will average 1.3% from 2023 to 2026. After growing 3.9% in 2022, Florida’s workforce growth will fall to 2.3% in 2023, and with a slowing economy, workforce growth will average 1% in 2024-26. Florida’s unemployment rate fell to 4.7% in 2021 and 2.9% in 2022. The slowing economy will push the rate to 3.1% in 2023, 4.4% in 2024 and 5% in 2025 and 2026.
• Housing starts have felt the bitter cold of higher mortgage rates. The total number of starts was 192,213 in 2022 – before higher mortgage rates and worries about a slowing economy cause starts to decline to 183,134 in 2023, 158,716 in 2024, 154,424 in 2025 and 150,981 in 2026.
• Real personal income growth will average 2.8% in 2023-26. After an inflation-related decline in 2022, growth will reach 3% in 2026. Florida’s average growth will be 0.8 percentage points higher than the national rate over the four-year period 2023-26.

Snaith is director of UCF’s Institute for Economic Forecasting and a nationally recognized economist in the areas of analysis, economic forecasting and market sizing. Bloomberg News has recognized Snaith as one of the country’s most accurate economic forecasters, and he has served as a consultant for both local governments and multinational companies.