Florida faces a year of unprecedented opportunities tempered by some economic challenges, according to participants at a virtual conference held by the Florida Chamber of Commerce.
“We believe that Florida is going to see another year of growth,” Mark Wilson, president of the chamber, said during its online 2023 economic outlook and jobs solution summit in January.
“We think we’re going to see job growth, population growth, gross domestic product growth and we’re very excited about that,” he said.
During the event, the Florida Chamber Foundation, which partnered with economists and industry experts, unveiled its economic and demographic predictions for this year.
On the employment front, they forecast that 2023 will be another year of strong job growth in the state.
Florida businesses have created 699,800 jobs since Gov. Ron DeSantis took office, the Foundation said in a release. “We were one of the first four states to fully recover jobs to pre-COVID levels and now have 487,400 more jobs than we did pre-pandemic.”
Despite the threat of a national recession, it believes more than 250,000 jobs will be created this year.
Looking at demographics, they forecast that population growth will remain strong.
Florida added 416,000 residents in 2022 and the Foundation predicts that around 350,000 new residents will flock to the state even as interest rates rise, recession fears strengthen and consumer confidence dampens domestic migration.
Florida is the third most populous state after California and Texas. About 1,000 net new residents come to the state each day, with half coming from other states and the other half coming from other countries.
Wilson said the governor and legislature want to take Florida budget, which stands at more than $100 billion, down under that mark as the pandemic winds down.
“This is a big reason people are coming to our state,” Wilson said. “If you think about Florida versus New York — Florida has more people than New York, but the New York State budget [at around $220 billion] is more than twice the state budget of Florida.”
Data from the Internal Revenue Service shows that $23.7 billion in net annual income migration to the state. The Foundation expects this to continue to rise as people from other states come to live in Florida for economic opportunity, less burdensome regulations and no state income tax.
“Florida’s economy is much better situated to handle the ups and downs of the national economy than most states,” the foundation said. “While the U.S. economy did go into a recession, Florida’s GDP continued to grow. Now that the national economy has come out of a recession, we expect strong GDP growth for Florida in 2023.”
The Florida 2030 Blueprint is a strategic plan that outlines 39 goals by supporting talent supply and education, innovation and economic development, infrastructure, business climate and competitiveness, civic and governance systems and quality of life. The aim is to grow the state into a top 10 global economy by 2030.
A report issued in December the state Division of Bond Finance said Florida is well positioned economically and should see stability through future economic cycles despite threats from rising inflation and higher interest rates.
Florida’s general obligation bonds are rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.
Total state direct debt outstanding was $17.1 billion as of June 30, a decline of $1.3 billion from the prior fiscal year. This continues the downward trend which began in 2011.
“We’re excited in Florida because 2023 will be another year of population growth, wealth migration, more jobs and economic growth,” Wilson said. “We are fighting to keep Florida, Florida.”
Still, the state faces many challenges both near- and long-term.
One concern on the horizon is that Florida records more deaths than births.
Another challenge facing the state is the rise of remote, hybrid and work-from home scenarios.
Florida’s aversion to taxes also means lower public services. The state is one of 11 to reject expanded Medicaid, and its working people are less likely to have health insurance.
In 2021, 7.3% of Florida children lacked health insurance, compared to 5.4% nationally, according to the left-leaning Florida Policy Institute, which adds that that number will be higher when federal funding linked to the COVID-19 pandemic expires.
Employee availability and the workforce participation rate will continue to remain a concern.
The Foundation predicts that the state unemployment rate will continue to remain below the national average of 3.5%. Florida’s jobless rate is currently 2.5% and the group expects the trend of lower unemployment will continue throughout 2023.
“There will continue to be more jobs looking for people than people looking for jobs,” the foundation said. “In fact, currently for every 100 open jobs in Florida, there are only 62 people looking to fill them.”
“When we examine the sectors that contributed most significantly to the state’s annual job gains, we see that leisure and hospitality hires accounted for a quarter of all jobs created in Florida in the past year,” said Dave Sobush, director of research at the Florida Chamber Foundation.
“This sector, which represents much of our tourism economy, also caters to Florida residents,” he said. “It was the last to return to pre-pandemic levels of employment, doing so in October.”
Another cause for concern is rising inflation and interest rates.
“Inflation has been 7.1% over the last 12 months, and it will continue to limit consumer spending,” the Foundation said. “Florida will have continued economic growth, but it will not be as robust as it should be if inflation was maintained around 2% as it had been during the decade from 2010 to 2020 period.”
Still, they forecast inflation will decrease as the cost of energy comes down due to lower demand and the Federal Reserve’s hike in interest rates.
However, the housing market is starting to slow a bit as the rate rise.
“After nearly two years of rapid sale and home price growth, the housing market here in the Sunshine State finally started to cool off in 2022,” said Brad O’Connor, Ph.D., chief economist for Florida Realtors. “The primary reason for the market’s cool-down is a rapid escalation in mortgage interest rates, which have significantly dampened housing demand across the U.S., not just here in Florida.”
The Chamber Foundation predicts, however, that transactions of single-family homes will return to pre-pandemic levels this year, without much erosion in prices.
The Chamber Foundation forecasts between 280,000 and 290,000 sales, which are similar to pre-pandemic levels, with a median sales price of $380,000 by year end, about 5% lower than 2022.
“Through a combination of rising interest rates for those looking to finance their home purchase as well as general concerns for inflation, we have seen sales and starts generally wane, returning to somewhat typical levels,” Sobush said.
Renters have also been hard hit.
According to recent housing survey data, the share of Florida’s renting households that are considered housing burdened — paying more than 30% of their income for housing — increased for the second year in a row, following six years of modest declines, he said.
“More than half, 56.8% of renting households are housing cost burdened,” Sobush said. “And nearly 29% of renting households are severely cost burdened, paying more than 50% of their income towards housing — a tremendous headwind for attracting and maintaining workforce.”
Established in 1916, the Florida Chamber of Commerce is an organization devoted to the advocacy of private businesses in the state. Founded in 1968, the Florida Chamber Foundation is its business-led development and research arm.