Florida’s economic outlook for 2020 is good but not great. That’s according to economic commentator Hank Fishkind. He tells 90.7’s Matthew Peddie that slowing domestic migration and tourism are worrying signs for the economy.
Hank Fishkind: First of all, it's important that our listeners understand we have already passed the peak for this business cycle. The peak occurred in 2015. In 2015, US GDP growth peaked at 2.9%. And since then it's slowed down, and last quarter it was at 1.8%. Florida has a similar trend. Florida's gross state product peaked at 4.2% in 2015, Orlando's peaked at 5% in 2015, Daytona, Melbourne, Palm Bay, Tampa, you name it, they peaked in 2015. And the outlook for US GDP in 2020, by most estimates is for good but not great growth, about 1.5% or so. And it's very important to recall as we've discussed many times on this show that the trajectory for gross state product or Orlando product or Daytona's gross state product is very highly correlated with the trajectory for GDP. Measuring it statistically, the correlation coefficient is 85 to 95%. Now, what that means is, if we actually knew what GDP was going to be, then we could explain 85 to 95% of where our growth is going to be. So US growth growing modestly, Florida is going to grow modestly. And we're already past the peak. That sort of proves that point.
Matthew Peddie: Okay, so are there other factors you're looking at more locally that caused you to expect good but not great growth in 2020?
HF: Yes, there are. So population again, peaked in Florida, in 2015 at 425,000, which is quite a good number. It's slowed to about 350,000 this past year. Now 350,000 population growth, obviously a big number Matthew, but it's the average population growth that has occurred in Florida since 1970. And what's important about that is, given the very long trajectory of this growth expansion cycle a whole decade, very low interest rates, very strong housing markets in most places or at least modestly strong housing markets in some, we should have seen much more population growth in Florida: we're simply not seeing it. And that comes about primarily because of the slowdown in domestic migration into Florida, and the slowdown in domestic migration into Central Florida. And our gains in tourism have slowed significantly over the last six months. So again, I think growth will be good. But all these factors suggests it's not going to be great in 2020.
MP: So when you look at some particular areas of Central Florida, what areas will be particularly strong?
HF: Well, geographically the strongest growth is going to continue to occur as it has across the I4 corridor, particularly in Orlando and Tampa and in between, and then there's a pocket of very strong growth in southeast Florida, Miami-Dade County and Broward. The rest of the state is doing okay. But the growth will be stronger in those areas. In terms of sectors, what we'll see is more growth in the business and professional sectors and in healthcare because they're more population driven, and our population has grown so much in Florida, and there'll be more gains in construction because as we've discussed, we've under produced housing during this whole cycle. And so we're going to see some catch up on the housing side.
MP: So what's the best case for the Florida economy?
HF: Well, I think the best case for Florida's economy is the trade war settles out, that the political turmoil after the impeachment hearings dies down a little bit, and that the global economy stabilizes. If that could occur, we should see GDP growth at two, two and a half percent: good but not great, but better. And that would have a significant better effect on Florida, Matthew. So, Happy New Year to you and to our listeners.
MP: Same to you, Hank, thank you so much.
HF: Thank you.