What happens when Florida can't rely on population growth to fuel its economy?
It will be a lot harder — and take longer — to rebuild the state's economic engine after this recession when compared with past recoveries, economist Sean Snaith forecasts.
Stretching back into the 1970s, Florida averaged annual population growth of more than 3.6 percent. Its population is now growing by less than 1 percent this year and "for the next few years," said Snaith, director of the University of Central Florida's Institute for Economic Competitiveness.
That's a chief factor weighing on Snaith's restrained predictions in his annual state and regional economic forecast released Tuesday. Even though the national recession should end in the fourth quarter of 2009, don't look for Florida to emerge until the middle of 2010.
The housing bust and a "faulty tax structure" have combined to "put a strain on Florida's economy unlike anything most residents have ever felt," Snaith said.
To help its plight, Florida should "grab" all the federal stimulus money it can, Snaith recommends, noting the state could be eligible for about $13 billion to build roads and bridges, help schools and extend unemployment benefits, among other uses. He also calls for closing sales tax exemptions and expanding the sales tax to include services in order to broaden the state's tax base.
Closer to home, Snaith's prognostication is a bit more encouraging. He thinks the Tampa Bay area will do a better job than most of the state in expanding its economy and boosting wages over the next three years.
Among his predictions:
• Unemployment rates will stay above 10 percent for most of 2010 before starting a slow retreat.
• The only sectors solidly adding jobs between 2009 and 2012 will be education and health services (which he predicts will be up 2.5 percent) and professional and business services (up 4 percent).
• The state's economy (a.k.a. the "gross state product") was flat in 2007 and down just under 1 percent in 2008. He forecasts it dropping 3.9 percent this year before eventually accelerating to 3.9 percent in 2012.
• Housing construction will bottom out in the second quarter of 2009. But the trough is "deeper than many expected" with annualized housing starts that quarter of 38,250, representing just 13 percent of the number of housing units begun during Florida's peak in the fourth quarter of 2004.
Tampa Bay area
• Over the next three years, personal income will grow 3.7 percent on average each year.
• Average annual wages are expected to increase 2.3 percent, one of the highest increases in the state. That comes after wages grew only 1.8 percent in 2008.
• Employment is expected to average 1.1 percent growth annually. The Tampa Bay region could gain 49,600 jobs through the $789 billion stimulus package, offsetting more jobs than were initially lost.
• Unemployment is expected to average 9.9 percent through 2012. The fastest-growing sector: professional and business services, with an annual average growth rate of 5.2 percent.