“Inflation nudged up in August, but wholesale prices are cooling and the downward labor market revisions have opened the door to rate cuts,” says Snaith, director of the �鶹ӳ����ý’s Institute for Economic Forecasting. “The Fed was too slow to tackle inflation after the pandemic and then cut too soon a year ago. Let’s see if they can finally get it right.”

Snaith has long criticized the Federal Reserve’s pandemic-era playbook. But he says today’s backdrop, including softer wholesale prices and evidence that payroll growth was overstated, strengthens the case to begin a new phase of interest rate cuts.

“The Fed is independent, not infallible,” Snaith says. “This week’s decision is a chance to prove it’s paying attention.”

Alongside his critique, Snaith released his , a four-year outlook for the national economy. Highlights include:

• Growth slows: GDP slips from 2.8% in 2024 to 1.8% in 2025, before rebounding to 2.6% in 2026 and easing again to 1.6% by 2028.
• Jobs steady: Unemployment holds near 4.3% through 2028 — consistent with full employment.
• Spending cools: Consumption growth eases from 2.8% in 2024 to about 2% over the next several years.
• Budgets mending: Wages are finally outpacing inflation, helping households repair strained budgets, even as they wrestle with more than $1.1 trillion in credit-card debt.

People were still in deep shock from their homeowners’ rates.

Not as many homebuyers were stirring, not even a mouse;

Four hundred grand just to buy a gingerbread house?!

Mortgage applicants filled out their paperwork with fear,

The 30-year fixed rate was three percent just last year!

High prices and insurance premiums made monthly payments grow,

As did Florida transplants seeking taxes so low.

I in my bed with a tear-stained Terrible Towel,

In my head no sugar-plum visions, just old Jerome Powell.

Inflation is slowing, but not at a brisk pace.

The Fed is the tortoise in a price stability race.

Then in front of my house, I heard a loud clatter.

Sleep interrupted again, at least it wasn’t my bladder.

I peeked out the window hoping to see Santa — no luck,

No sleigh, not one reindeer, just an Amazon truck.

The labor market shortage is taking its toll,

I hear there’s now self-checkout aisles at the North Pole.

Not enough workers have caused wages to rise,

Must be good for employees you’d be wrong to surmise.

Yes, paychecks the past two years are increasingly large,

But for ends to meet, households need to make a credit card charge.

One-point-one trillion-plus in credit card debt is dampening holiday cheer,

The federal government to consumers: “Please hold my beer.”

Trillions in deficit spending without any debating,

Have led two agencies to cut the U.S. credit rating.

The U.S. economy is now starting to slow,

Inflation-battered, debt-ridden consumers are forced to forgo.

In Florida the economy isn’t immune,

But during this economic slowdown we’ll hum a new tune.

The past two recessions wreaked havoc and pain,

No broken bones this go ’round, just more of a sprain.

Most of our ailments are because we are growing.

Into our state a river of people keeps flowing.

And to the NCAA, Santa, bring lots of coal,

Naughty isn’t the word for what was done to the ‘Noles.

Our beloved Knights are now in the Big Twelve,

Albeit with an athletic budget no bigger than elves.

Over time we can hope that budget will grow.

In the meantime, it’s Gasparilla — that’s eight bowl games in a row!

So, here’s to the New Year and hope for the best,

Health and happiness from Destin down to Key West.

You can read Snaith’s full Florida economic forecast at .

The good news: Snaith, director of , is likely to keep his job — for now. The bad: even AI is worried about the national debt.

After last week’s downgrade of U.S. credit, the bots (and us humans) have reason for concern, Snaith says, pointing to his forecast prediction of a $40-trillion-plus national debt by 2026.

“At some point, it’s going to catch up to us with potentially catastrophic results,” he says. “Government budget management has become a series of resolutions, stand-offs and spending without any real discussions about fiscal priorities or consequences.”

Slower-than-projected economic growth, a recession and hiked interest rates would all push deficits even higher, says Snaith, whose predictions on these and more are available in his (complete with ChatGPT-composed song lyrics about inflation for the budding economist musicians out there).

A Recession is ‘Definitely Maybe’ On Its Way

Last month’s better-than-expected gross domestic product report suggests the United States might escape a recession this year, Snaith says.

Coupled with the strength of the labor market, what was once a near-certain downturn is now “definitely maybe,” Snaith forecasts in his report.

“All indicators said the U.S. was headed into recession, but you’ve got a resistant labor market that doesn’t want to buckle under the weight of these higher interest rates — something that historically should have happened,” Snaith says.

“Ultimately, it’s the labor market’s resiliency that is keeping any recession at arm’s length and stiff-arming it into the future.”

Still, Snaith says economic woes from inflation will persist for some time, and he predicts consumer spending may give way to the erosion of real income in the second half of 2023.

“Some of the recent slowdowns in inflation should provide a floor to keep consumers from falling too far, but the real damage has already been done,” Snaith says.

Additional highlights from Snaith’s four-year U.S. economic forecast include:

• During the 2023-26 period, federal government spending growth is going to be slightly negative, growing at an annual average pace of 1.1% and consistently averaging nearly $1.85 trillion. The amount that the projected deficits will add to the national debt over the next four years will be more than $7.4 trillion, pushing the total national debt to more than $40 trillion and a debt-to-GDP ratio of 141%.
• U.S. consumers powered the 2020 recovery. Following the end of most lockdowns, consumers were ready to spend. Since then, high energy prices, food costs and housing costs have steadily eroded their purchasing power. While credit card debt and drawing down savings have temporarily patched the hole in their monthly budgets, this loss of purchasing power has set the table for an approaching economic slowdown.
• The housing market remains tight. High prices plus 7% mortgage rates have eroded demand. However, persistently low inventories will reinforce the sector. Housing starts will decline from 1.6 million in 2022 to 1.4 million in 2023 to 1.3 million in 2024, and remain at this level through 2026.
• Core consumer price inflation will continue a slow decline in the latter half of 2023, even as energy prices are likely to push the headline consumer price index higher. By the end of 2024, inflation will be close to the Fed’s target level of 2%, and interest rate cuts are unlikely to happen before this target is reached.

Snaith is a nationally recognized economist in the field of economics, forecasting, analysis and market sizing. He has been recognized by Bloomberg News as one of the country’s most accurate economic forecasters and has served as a consultant for both local governments and multi-national corporations. Before joining �鶹ӳ����ý’s College of Business, Snaith held faculty positions at Pennsylvania State University, American University in Cairo, the University of North Dakota and the University of the Pacific.

“Economically speaking, we have our flashlights, batteries, food and water,” Snaith says of Florida’s economy on the first day of the Atlantic hurricane season. “Compared to what Florida went through in the two previous recessions, the next recession will be more akin to a tropical depression.”

Much of the reason is due to consumers’ continued spending on services and experiences —critical for Florida’s tourism sector.

Plus, Snaith, the director of �鶹ӳ����ý’s Institute for Economic Forecasting, explains: “Florida’s continued population growth, which led the nation last year, and the associated wealth and income it has brought to the state serve as ‘sandbags’ against erosion of economic activity. Record-low unemployment and continued job growth are like our ‘storm shutters,’ lessening the damage that a recession would do to our labor market.”

Ultimately, Snaith says “Florida’s economy is as well prepared to weather a national recession as we could be.”

Snaith also adds that Florida’s red-hot housing market has cooled.

“High prices coupled with rising mortgage rates have brought an end to the spike in prices,” he says. “The possibility of an economic slowdown nationally might lead to some price depreciation, but absolutely nothing like we saw in 2008-2009.”

Debt Ceiling Debacle

Of the frenzied politics over the national debt ceiling, Snaith likens the drama to a bad movie “we’ve been forced to watch over and over again. There’s no M. Night Shyamalan twist here.”

The deal, as it stands Thursday morning, will have little economic impact.

“Some of the concessions are headwinds for the economy, but this is not going to have a major shock,” Snaith says. “It’s simply not a dramatic reduction in spending and likely only to be temporary.”

More Florida Forecast

Snaith’s forecast also includes individual outlooks for Florida’s 25 metro areas. Some additional highlights from Snaith’s latest four-year Florida forecast include:

• From 2023-26, Florida’s economy, as measured by Real Gross State Product, will expand at an average annual rate of 1.2%. Real Gross State Product will decelerate during the economic slowdown as growth will slow to 0.8% in 2024 and in 2025, then accelerate to reach 1.6% by 2026.
• Real personal income growth will average 2.2% during 2023-2026. Following an inflation-driven pullback in 2022, growth will average 2.9% during 2025-2026, hitting 3.0% in 2026. Florida’s average growth will be 0.2 percentage points higher than the national rate over the 2023-26 four-year span.

• Payroll job growth in Florida will begin to falter with a slowdown in the U.S. economy, but not in every sector. After year-over-year growth of 4.6% in 2021 and job growth of 5.3% in 2022, payroll employment in 2023 will decelerate to 1.0% and contract by 2.4% in 2024 and by 0.5% in 2025. Job growth turns positive and grows by 0.8% in 2026.

• Housing starts will be suppressed by the slowdown and higher mortgage rates. Total starts of 158,349 in 2020 jumped to 193,049 in 2021 and held at 192,213 in 2022 — all before higher interest rates and a slowing economy result in a deceleration in starts to 142,183 in 2023 and 137,121 in 2024 before ticking up to 147,146 in 2025 and 149,030 in 2026. Rapid house-price appreciation has been washed away with demand dampened by rising mortgage rates, decreasing affordability and the slowing economy.

“Florida can’t escape a recession,” says Snaith, the director of �鶹ӳ����ý’s Institute for Economic Forecasting. “But we won’t suffer like we did during the previous two. If Florida’s economy had been a hospital patient during 2020 or in 2008-09, its condition would have been somewhere between serious and critical. This time around, it will be good or stable — and probably even closer to good.”

In his , released this morning, Snaith predicts the recession may even yield some relief for residents and businesses, such as an end to the rapid rise in housing costs and alleviating supply chain woes on everything from automobiles to appliances.

One benefit we’re already seeing, Snaith says, is a decline in oil and gas prices, which when coupled with sky-high housing and food prices have been a severe strain on Floridians’ budgets.

The ‘Pasta Bowl Recession’ and Inflation

Even don’t preclude an economic slowdown, Snaith says.

While Florida’s already-strong labor market is poised to strengthen in light of the latest U.S. employment report, Snaith continues to predict his which he defines as a shallow slide into—and eventually a gradual climb out of — a recession. (Think back to Snaith’s 2009 , but this time wider with flatter curves.)

This new tableware-shaped recession will actually help the Federal Reserve in its fight to bring down inflation.

“It means the Fed will not have to raise interest rates as high as they otherwise would if the economy was still growing at the pace that it was in 2020 and 2021 when inflationary pressures were much stronger,” Snaith says. “The result is that the trade-off we would typically see between lower inflation and higher unemployment rates won’t be as large as it historically has.”

Some additional highlights from Snaith’s latest four-year Florida forecast include:

• The impact of the “Pasta Bowl Recession” in Florida will continue to slowly manifest as 2023 progresses. There will not be large payroll job losses or very high unemployment rates as in the previous two recessions, but this mild recession will impact the labor market starting in 2023 and continuing into 2024.
• From 2023-26, Florida’s economy, as measured by Real Gross State Product, will expand at an average annual rate of just 0.6%. However, Real Personal Income Growth will average 2% during 2023-26, and Florida’s average growth will be 0.3 percentage points higher than the national rate over the next four years.
• Labor force growth in Florida will average 0.8% from 2023-26. After growing 3% in 2022, Florida’s labor force growth will decelerate because of the recession in 2023-24, then accelerate in the final two years of our forecast.
• Florida’s unemployment rate fell to 4.6% in 2021 and then to 2.9% in 2022. The recession will push up the rate to 4.6% in 2023 and to 5.8% in 2024 before easing slightly to 5.4% in 2025 and 5% in 2026.

“The Pasta Bowl Recession began with a whimper and will end the same way in 2023,” says Snaith, who dubbed it the Pasta Bowl Recession due to its low and shallow shape.

While the recession may not be deep, he expects it to last four quarters — representing the wide part of the bowl. In May 2009, Snaith accurately predicted the end of the Great Recession and forecasted the gradual recovery that followed as the Gravy Boat Recession. The institute releases quarterly U.S. and Florida economic forecasts authored by Snaith. Released today, the U.S. Forecast includes economic analyses and projections from 2022 to 2025.

In this report, Snaith predicts that:

• The “jobfull recession” that characterizes the Pasta Bowl has been fueled by record declines in productivity. Payroll job growth of 3.8% in 2022, will turn negative in 2023 as the “jobfull recession” transitions with job growth falling to -0.3%.
• Real consumption spending accelerated to 7.9% in 2021 but will ease to 2% in 2022, then to 1% in 2023 and then rise gradually to 1.8% in 2024 and 1.6% in 2025.
• Consumer price inflation will begin a slow decline in the second half of 2022. Housing and food prices will slow the pace of this decline. By the end of 2023, inflation will be close to the Fed’s target level of 2% thanks to interest rate hikes and the Pasta Bowl Recession.
• Quarterly real GDP growth during the period 2022 Q1 through 2023 Q1, which includes the Pasta Bowl Recession, is expected to be -1.6% in 2022 Q1, -0.9% in 2022 Q2, -0.7% in 2022 Q3, -1.1% in 2022 Q4 and -0.5% in 2023 Q1.
• High prices plus rising mortgage rates are eroding demand in the housing market. Ultra-low inventories will underpin the sector. Housing starts will decline from 1.56 million in 2022 to 1.25 million in 2023 then hover at this level before ticking up to 1.30 million in 2025.
• 2 million job openings will provide a shock absorber for the impact of the recession on the labor market. The headline unemployment rate is expected to rise from 3.8% in 2022 to 6.6% late in 2024 before beginning a gradual decline in 2025.

“The pasta bowl recession in Florida will not be pleasant like a trip to Olive Garden,” says Snaith, returning to the kitchen for his latest recession descriptor after coining the term ‘gravy boat recession’ in 2009, “but there will be several benefits of an extended period of slower economic growth.”

Florida’s economy, as measured by Real Gross State Product, is expected to expand at an average annual rate of 1.4% from 2022-2025. Although it will not contract during the recession, growth will slow to 0.5% in 2023 and 2024 before accelerating in 2025.

Labor force growth in Florida is forecasted to average 1.4% from 2022-2025. After growing 2.5% in 2022, Snaith says, Florida’s labor force growth will slow from 2023-2024 before mildly accelerating in 2025.

Payroll job growth in Florida will begin to falter during the recession but not in every sector, Snaith says. After year-over-year growth of -4.9% in 2020, the labor market rebounded to 4.6% in 2021. With job growth expected to be 3.9% in 2022, the payroll employment will contract by 0.6% in 2023 and by 1.3% in 2024 before expanding 0.8% in 2025.

The unemployment rate that jumped from 3.3% in 2019 to 7.9% in 2020 fell to 4.8% in 2021 and will fall to 3.6% in 2022. The recession is expected to push up the rate to 4.9% in 2023 and to 5.8% before easing slightly to 5.7% in 2025.

Real personal income growth will average -0.7% during 2022-2025. Following a pullback in 2022, growth will average 1.7% through the end of the 2025 hitting 2.5% in that year. Florida’s average growth will be 0.5% higher than the national rate over that four-year span.

Housing starts will pick up going forward, Snaith forecasts, but not nearly fast enough to offset the large shortage of single-family housing in the short run. Total starts, which jumped from 156,762 in 2020 to 190,061 in 2021, will rise to 191,593 in 2022 before decelerating to 166,461 in 2023 and 161,911 in 2024. Total starts will tick up to 162,871 in 2025. Rapid house price appreciation will largely vanish over this period as supply catches up with demand tempered by rising mortgage rates, decreasing affordability and recession.

For the complete Florida & Metro Forecast, now including all 22 of Florida’s  metropolitan areas, visit

The Institute for Economic Forecasting strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses.

Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.

In this report, Snaith predicts that from 2021-2024:

• Florida’s economy, as measured by Real Gross State Product, will expand at an average annual rate of 2.4%. After contracting by 2.8% in 2020, RGSP will rise by 5.1% in 2021.
• Payroll job growth in Florida will continue to outpace national job growth as the labor market climbs out of a deep hole. The labor market will continue its rebound with average job growth that is 0.1 percentage points faster than the national economy.
• Labor force growth in Florida will average 2.2% and strong payroll job creation will boost Florida’s labor market recovery.
• The efforts to lower the state’s unemployment rate will continue and Florida’s accelerating job creation will help. The unemployment rate that jumped from 3.3% in 2019 to 7.9%in 2020 will fall to 5% in 2021 and 4.6% in 2022. It will continue to drop to 4.1% in 2023, and then ease to 4% in 2024.
• Housing starts will pick up but not nearly fast enough to offset the large shortage of single-family housing in the short run. The total starts of 156,763 in 2020 will jump to 189,736 in 2021, then ease to 169,678 in 2022, 155,816 in 2023 and 149,360 in 2024. House price appreciation will decelerate over this period as supply catches up with strong demand and as affordability gets further out of reach for many.

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For interviews with Snaith, contact Rachel Williams at rachel.williams@ucf.edu or 407-823-1044.

The institute releases quarterly U.S. and Florida economic forecasts authored by Snaith. Just released, this year’s Q2 U.S. Forecast includes national economic analyses and projections.

In this report, Snaith predicts:

• Consumption spending will accelerate to 7.7% in 2021, ease to 4.4% in 2022, then ease to 2.5 percent in 2023 and 2024. Consumption spending shrank by 3.9% in 2020.
• Ultra-low inventories and mortgage rates will underpin the housing market. Housing starts will rise from 1.4 million in 2020 to 1.59 million in 2021, then decelerate to 1.32 million by 2024.
• The headline unemployment rate (U-3) is expected to decline to 3.5% in 2024.
• Payroll job growth of -5.7% in 2020 will be followed by 3.4% in 2021, 3.5% in 2022, 1.3% in 2023 and 1% in 2024.
• The U.S. economy, as measured by Real Gross Domestic Product, was -3.5% in 2020, but will accelerate to 6.7% in 2021 and ease to 4.7% in 2022 and 1.9% in 2023. It will rise to 2.2% in 2024.

For a look at the full report, see: .

While consumer spending shrank by 3.9 percent in 2020 amid the recession, the institute’s first-quarter U.S. forecast predicts spending will accelerate to an increase of 5.4 percent this year and slow to an increase of 2.6 percent by 2024. CARES Act funding and the COVID-19 vaccine are quelling fear of the pandemic, prompting consumers to open their wallets and businesses to hire new employees. Snaith maintains a positive outlook on the months ahead, but it could take until 2022 for unemployment to fall back to pre-pandemic levels.

“Consumers are powering this recovery, and as the effects of the pandemic fade, consumer confidence will rise in tow.”

“Job growth will help ease the damage to the labor market from the lockdown, but the road to recovery will take at least another year,” Snaith says. “Consumers are powering this recovery, and as the effects of the pandemic fade, consumer confidence will rise in tow.”

• Job growth will continue. The growth rate will reach 3.9 percent in 2021, before slowing to 3.1 percent in 2022, 0.8 percent in 2023 and 0.5 percent in 2024.
• Unemployment will decline to 4.2 percent by 2023.
• The housing market will continue to progress and improve through 2021 –—New-home construction will rise from 1.38 million in 2020 to 1.56 million in 2021, then decelerate to 1.24 million by 2024.
• Real Gross Domestic Product (GDP) growth will accelerate from its historic 2020 low to 5.4 percent in 2021, before easing to 4 percent in 2022, 2.5 percent in 2023 and 2.4 percent in 2024.

With economic policy measures largely at a standstill in Washington D.C., public health initiatives will likely drive the speed of the nation’s economic recovery. The looming possibility of future lockdowns, vaccine distribution concerns and the nation’s understanding of the COVID-19 virus will have the greatest effect on the strength of the rebound.

Interest rates are similarly projected to remain near zero until mid-2024, when the Federal Reserve will slowly begin reversing the rate cuts made during the COVID-19 recession. The Fed’s delay to increase interest rates will help fuel investment growth once the pandemic subsides.

“This is all uncharted territory for monetary policy,” Snaith says. “Washington D.C. has been focused on politics more so than the economy and there is no previous playbook on how best to carry policy forward.”

For the complete U.S. report from the Institute for Economic Forecasting, visit .

The Institute for Economic Forecasting strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses.

Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.