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Tampa Bay economy stays hot, but not as hot as Orlando's

The Tampa Bay area ranked in the top 25 metro areas for economic output. (AP Photo/Chris O'Meara | 2012)
Published Jun. 11, 2018

Tampa Bay's economy keeps chugging along, with output totalling $148.6 billion last year.

That's more than the entire state of Arkansas. It's also more than Nebraska. For the geographically adept, it surpasses Hungary and Angola, and comes up just short of Venezuela and Kazakhstan.

According to a report released Friday, Tampa Bay squeaked into the top 25 metro areas nationally, and ranked second in Florida, behind Miami and ahead of fast-charging Orlando.

Not too shabby, even if there are some signs of an economic slowdown.

"There are a lot of metros that would be envious of Tampa Bay," said Karl Kuykendall, a regional economist with IHS Markit, which prepared the annual Metro Economies report for the U.S. Conference of Mayors.

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The report uses economic output, job growth and other financial indicators to rank 381 metro areas, and throws in a bunch of countries as reference points. It makes for some fun comparisons — tiny Sebring at $2.1 billion ranks ahead of 24 countries, including Belize, Somalia and Tonga — but it also provides a look into our economic future.

Key projections from the authors:

• Job gains will downshift from about 200,000 a month nationally to about 100,000 in the second half of 2019, as the stimulus from the recent tax cuts fades.

• As baby boomers retire, the share of the population 65 years and over will jump from 16 percent in 2017 to 22 percent by 2048, pushing up outlays for Social Security and Medicare.

• Unless the labor pool expands more than expected, long-term job growth will be slower, with total employment increasing from 153 million this year to 188 million in 2048.

• Slow labor force growth will also put a drag on economic output, which will average only 2 percent annually from now until 2048.

"Much of our longer term growth will rely on more people joining the workforce," said Jim Diffley, IHS Markit's executive director. "It's hard to say if it will increase, but I'm hopeful it will."

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Here are four more takeways from the report:

1. Optimism reigns even as job growth slows.

Florida and the Tampa Bay area have been on a roll for a while, so a slowdown, or as economists refer to it, a deacceleration, isn't worth fretting about too much.

Florida's jobs growth cooled starting in late 2016 and slowed more after Hurricane Irma last year. The leisure and hospitality and the retail trade sectors have cooled the most, said Kuykendall, not surprising given how hot they were for several years. Hiring in the housing and construction industries has also slowed.

"I don't want to raise alarm bells," he said. "Florida is still one of the fastest-growing states when it comes to jobs. This is one of those natural things that happen in any business cycle."

2. Tampa Bay is doing well, Orlando even better.

The city of Disney and amusement parks ranks below Tampa Bay in economic output, but has grained ground and is projected to close the gap further in coming years. In 2016, Orlando's output totaled $127 billion. In 2019, the report estimated it will grow to almost $150 billion.

Orlando's output is projected to grow at 3.3 percent in 2019/2020, compared to 3.1 percent for the Tampa Bay area.

The trend is the same for job growth ...

Orlando: 2.5 percent.

Tampa: 2.1 percent.

Significantly more people in Orlando remain in the labor pool, too ...

Orlando: 64.8 percent participation.

Tampa: 59.5 percent participation.

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Orlando has been outpacing the Tampa area's growth in employment, population and economic output for at least a couple decades, Kuykendall said.

"Orlando stands out because of its booming leisure and hospitality sector and its booming medical sectors," he said. "Tampa has been growing fast. Orlando has just been growing faster."

3. Florida vs. New York: It's still one-sided.

The Sunshine State passed New York a few years ago to become the third-most populated state, but it will likely be a very long time before Florida can brag about having more economic might.

New York ($1.6 trillion) remains third in gross product, behind California ($2.7 trillion) and Texas ($1.7 trillion), and way ahead of fourth-place Florida ($971 billion).

New York's financial and business sectors are massive contributors to the state's economic output. Those industries pay much better than many of Florida's dominant industries, including tourism and retail.

Kuykendall said the gap would be slow to close, despite Florida's population advantage.

"Florida is a fast-growing state, but as it does grow, a lot of those jobs come from sectors that are low paying," he said. "That is a concern for Florida."

4. How the U.S. goes, so goes Florida.

Both Kuykendall and Diffley think there is still lots of life left in the country's long economic recovery. The biggest risks to Florida are on a national scale. Florida generally does well when the broader economy is doing well, and suffers when it isn't. The state relies a lot on tourism and migration from other states, both of which often slow if the U.S. economy sours.

"Any big policy mishaps that would slow national growth would be hugely impactful to Florida," Kuykendall said. "But unhindered, there are still a few more years left in this post-2009 recovery. Florida is in good shape. We are fairly optimistic."

Contact Graham Brink at gbrink@tampabay.com. Follow @GrahamBrink.

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