Florida economy expands in 2011, but slower than 2010
Florida’s economy grew in 2011 for the second year in a row, but at a slower pace than in 2010, according to two recent reports by the Florida Legislature’s Office of Economic and Demographic Research.
The reports also noted that while the state’s unemployment rate dropped through the first four months of this year, the decline is almost entirely due to people dropping out of the labor force as opposed to improvements in employment trends.
“The job market will take a long time to recover — about 749,500 jobs have been lost since the most recent peak. Rehiring, while necessary, will not be enough,” the Legislature’s research arm said in a state economic overview June 6 and in a second report last week on key drivers of the economy.
The reports said “Florida’s prime working-age population” (age 25 to 54) is forecast to add over 2,600 people per month, so the hole is deeper than it looks.”
They concluded that the state will need to create about 1 million new jobs to get “the same percentage of the total population to be working as was the case at the peak.”
Florida’s unemployment rate dropped from 9.9 percent in December to 8.7 percent in April, so it appeared the state was making progress. However, the reports said 75 percent of that drop came from people who dropped out of the labor force.
When people are not actively looking for a job, they are not considered to be part of the labor force and are not counted as unemployed, even if they want to be working.
The reports said that if the “participation rate” in the labor force had remained constant since December, the true unemployment rate for Florida would have still been 9.6 percent in April.
Economic growth resumes
Looking at the overall economy in the state, Florida’s gross domestic product increased by 0.5 percent in 2011, the second consecutive year of growth after two years of declines.
That growth ranked Florida only 37th in the nation and was lower than the 0.9 percent growth for the state in 2010.
Per capita income in the state grew by 3.5 percent in 2011, lower than the national average of 4.3 percent and ranking only 45th in the nation.
“Florida growth rates are gradually returning to more typical levels. But, drags are more persistent than past events, and it will take several years to climb completely out of the hole left by the recession,” the research office said.
Population growth slows
In addition to the current economic picture, last week’s report looked at population trends that will be affecting Florida over the next two decades.
“Population growth is the state’s primary engine of economic growth, fueling both employment and income growth,” it said.
The state’s population is expected to grow relatively slowly by an average of 189,981 people a year from 2011-15, a 0.85 percent rate.
That is expected to increase to an average of 247,494 people per year from 2025-30, a 1.1 percent growth rate.
“The future will be different than the past; Florida’s long-term growth rate between 1970 and 1995 was over 3 percent,” the report said.
The state’s population is projected to grow from about 18.8 million in 2010 to 23.6 million by 2030, surpassing the 20 million level in 2016.
People age 60 and over are expected to account for 55.2 percent of the population gains over the 20-year period, while children under 18 will account for 15 percent.
Aging residents affect jobs, housing
Older workers are staying in the workforce longer right now, with participation rates among older workers rising from 10.3 percent in 2000 to 16.5 percent in 2010. That trend may not last.
“The Great Recession, which reduced the value of retiree savings and home values, is contributing to this trend and partially masking the labor force changes still to come,” the report said.
Over the long run, the research office projects the ratio of taxpaying workers to retirees will drop from three-to-one today to two-to-one in 2030. That will be good news for job seekers in the future.
“Worker shortages (especially among highly educated and skilled) will become the norm, meaning jobs will be readily available for this population,” the report said.
The aging population could put a crimp on the state’s finances because the elderly spend less than younger people on goods and services.
“The state’s current sales tax structure with its dependence on the sale of goods will ultimately come under pressure from this fact,” the report said.
“If this risk is not addressed, then the state will likely see much lower growth rates for sales tax receipts than it has normally seen in the past,” it said.
The aging population also will increase needs for health care and transportation services.
On the plus side, the aging of the baby boom generation will help create demand for housing as those people seek retirement homes.
That trend is already starting, and will help Florida’s housing market turn around, the report said.