Florida’s economy is on the mend. Unemployment is low, the gross domestic product has risen and population growth keeps a steady pipeline of cash flow into the state.
But despite these benchmarks for the economy’s success, residents in Tampa Bay and across Florida are still wrestling with drastic price increases.
“If all you focus on is the labor market, then yeah, the economy looks great,” said Michael Snipes, an economist at the University of South Florida. “But that doesn’t really get into the daily lives of pretty much everybody.”
Economists who spoke with the Tampa Bay Times said the inflation rate has improved but remains abnormally high. Meanwhile, wages haven’t kept up, so every dollar earned is worth less.
With less purchasing power, residents have cut back on leisure spending and some essentials. Rent and energy costs have skyrocketed, and more families are living paycheck to paycheck.
“We just feel things more acutely, given a few things about our economy,” said Holly Bullard, chief strategy and development officer at the Florida Policy Institute. She pointed to the state’s housing boom as an example. “We are an exaggerated version of America.”
These four charts illustrate the complicated cost-of-living problem — and its impacts — in Florida and Tampa Bay.
Inflation — held high by housing costs — outpaces wage growth
The region’s inflation rate has decreased since June 2022, when it peaked around 11%. But it remains higher than what is considered normal, Snipes said.
Tampa Bay has led the nation in inflation spikes. Data from the U.S. Bureau of Labor Statistics shows its acclivity is due to the region’s stubborn housing prices.
“Food is a necessity. … Housing is a necessity,” Snipes said. “What’s happening is inflation is sticking to those two goods because, simply, you have to have them.”
Rent increases in Tampa Bay finally cooled after increasing more than 25% in a single year during the pandemic. But housing costs remain high, fueled by the region’s explosive population growth and a shortage of available units.
The federal government considers housing unaffordable if it costs more than 30% of a household’s income. This is the reality for about half of Tampa Bay renters. As of October, the average rent in Tampa Bay was $2,104, according to data from Zillow.
Meanwhile, wages for most industries have failed to keep up with inflation since the 1980s, Snipes said. This means that even if Tampa Bay residents can find a job easily, and have more take-home pay, the money won’t go as far.
“That’s something that’s going to affect your quality of life,” Snipes said. “That’s something that’s going to affect whether you can afford food for your table, whether or not you can afford utilities because your rent is so high.”
Floridians have less money to spend
Despite this deficit, poverty levels seem to have decreased in the state. In 2022, about 12.7% of Floridians had incomes under the federal poverty line, showing a steady decline in the last decade.
But there are still just as many individuals seeking assistance, said Aaron Neal, senior data manager at United Way Suncoast. Population growth — particularly among transplants with higher incomes — has driven down the percentage, but not the number of people who are income-restrained.
“It doesn’t diminish need in any capacity at all,” Neal said. “Someone on the outside would say Florida is doing better, when honestly, Florida is just getting bigger, and it’s putting a lot more pressure on the systems people are engaging with.”
There are other ways to see how individuals are struggling to make ends meet. For example, nationwide, credit card debt has reached a new record, more than $1 trillion. In Florida alone, from 2021 to 2022, the average debt per person increased 14%, according to the Federal Reserve Bank of New York.
“A lot of people are in situations where you get to the end of the month and you’ve paid all your bills, but you still need to eat,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Forecasting. “Folks have turned to credit cards to patch that gap, but that’s not something that can persist for long.”
Snaith described an “erosion that is wearing customers down.” Consumers are less likely to make larger household or leisure purchases, he said, now that their pandemic-era savings are running out.
“I’ve got more money in my wallet, but those dollars are buying fewer goods and services, and ultimately that’s what matters,” he said. “It’s not the dollars in your bank account, it’s what those dollars can buy.”
Economists expect little change in 2024
The state’s healthy GDP and employment numbers are keeping the economy afloat, Snaith said, but next year, “I think it’s going to be a bit of a tightrope walk, to avoid slipping off the high wire into recession.”
Economists do not expect the region’s critical housing shortage to dissipate quickly. And federal efforts to fight inflation have slowed “to a crawl.”
On one optimistic note: Snaith said Florida’s economy is in better shape to weather a potential recession than previous events, like the pandemic lockdowns in 2020 or the 2008 foreclosure crisis.
Ironically, he said, that’s due to population growth — the same factor driving up housing costs. More people equals more economic activity.
“That’s like sandbagging before a storm,” he said. “It prevents the waters of recession from doing as much damage.”
The Tampa Bay Times has a team of reporters focusing on rising costs in our region. If you have an idea, question or story to tell, please email us at firstname.lastname@example.org.
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