State economist warns lawmakers of looming recession

But the problems are mostly global and Florida's economy remains strong, Amy Baker told the House Appropriations Committee.
Will the Florida Legislature make it harder for a Rays stadium deal? TIMES FILE PHOTO
Will the Florida Legislature make it harder for a Rays stadium deal? TIMES FILE PHOTO
Published Jan. 8, 2019

The Florida Legislature's chief economist warned lawmakers Tuesday to brace for a recession in the next few years.

"We're in the middle of a very fluid, very volatile time," Amy Baker told the House budget committee. "We need to be aware that there will be a recession again."

Baker, director of the state's Office of Economic and Demographic Research, said there has been a "definite slowing of growth" globally that mostly had "nothing" to do with Florida.

Instead, the slowing is in part from "fading stimulus from the tax cuts and the spending increases that were done in Congress," along with "some accumulating impact" from tariffs, Baker said.

Her warning of a looming recession is in line with national predictions.

Moody's Analytics, which state economists rely on, is predicting between a 12 percent and 43 percent chance of a recession happening within the next 12 months.

And Baker also cited a New York Times survey of business executives that showed nearly half expected a recession by the end of 2019.

And history is on Baker's side, as well. As she noted, the current economic expansion will turn 10 years old in June — "the longest time since the previous recession in recorded history."

But it wasn't all bad news Tuesday. Revenue collections ran above monthly estimates by $365.2 million since the last estimating conference, in August. That was the largest combined increase since April 2006, at the peak of the housing boom and about a year before the economy crashed.

Florida's economy has recovered since, Baker said. While construction has not grown to pre-recession levels, the high growth in tourism has more than made up for it.

Baker said that while her office is projecting an additional $840 million in general revenue money over the next two years, she warned that lawmakers should be cautious about spending it. The projections don't include the impacts of a potential recession, since nobody knows when, or if, it will happen.

Appropriations Committee Chair Travis Cummings, R-Fleming Island, said afterward that the state's revenue projections were obviously good.

However, "I don't think we need to jump for joy, either, in terms of where the economic climate is," he said.