The Sunshine State is on the cusp of a recession β if it hasnβt already started β says prominent ΒιΆΉΣ³»΄«Γ½ economist Sean Snaith. Fortunately, the impact wonβt be anything like Floridians saw in 2020 or the housing collapse of the late 2000s.
βFlorida canβt escape a recession,β says Snaith, the director of ΒιΆΉΣ³»΄«Γ½βs Institute for Economic Forecasting. βBut we wonβt suffer like we did during the previous two. If Floridaβs 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 β and probably even closer to good.β
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 weβre 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 Floridiansβ budgets.
The βPasta Bowl Recessionβ and Inflation
Even donβt preclude an economic slowdown, Snaith says.
While Floridaβs 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 intoβand eventually a gradual climb out of β a recession. (Think back to Snaithβs 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.
βIt 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,β Snaith says. βThe result is that the trade-off we would typically see between lower inflation and higher unemployment rates wonβt be as large as it historically has.β
Some additional highlights from Snaithβs latest four-year Florida forecast include:
- The impact of the βPasta Bowl Recessionβ 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, Floridaβs 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 Floridaβs 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, Floridaβs labor force growth will decelerate because of the recession in 2023-24, then accelerate in the final two years of our forecast.
- Floridaβs 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.
