Outlook Remains Favorable For State Economy, UF Researchers Say

May 2, 1996

GAINESVILLE —Moderate job growth should contribute to a favorable panorama for Florida’s economy over the next two years, according to the latest issue of “The Florida Outlook,” released today (5/2).

“Although the expansion in non-agricultural employment is expected to continue at a slower rate, that rate of growth is still sufficient to maintain the state unemployment rate below 6 percent,” said Thomas Fullerton Jr., senior economist at the University of Florida’s Bureau of Economic and Business Research, which compiles the quarterly “Outlook.”

The moderate job growth, coupled with relatively stable interest rates and controlled expansion of transfer payments, is likely to result in similar increases for personal income from 1996-98, he said.

“One cause for concern, and an underlying reality that continues to plague Florida’s economy, is the growing demand for technical skills in the labor market in a state with a high drop-out rate,” Fullerton said. “Workers are going to have to graduate from high school and go on to some kind of post-secondary education training program at a university, technical school or community college. Otherwise, permanently low wages and salaries will result.”

Florida’s job growth rate is expected to slow from 3.1 percent in 1995 to 2.6 percent this year. Service-sector employment will follow this pattern, slipping from a growth rate of 6.4 percent last year to 4.6 percent in 1996, he said.

In contrast, last year’s drop in finance, insurance and real estate employment will reverse to a positive gain, and public-sector job growth that lagged behind population increases in 1995 will match gains in 1996, according to Carol Taylor West, the bureau’s forecasting director.

This year’s overall population forecast for Florida calls for an increase of 275,100 people, similar to the growth the state experienced in 1995 when it expanded by 1.9 percent, she said.

“Florida is probably the single most popular region of the post-war period in the United States,” Fullerton said. “As a result, Florida grows at a rate that is generally double that of the nation as a whole.”

However, the economists find two factors are causing the state’s population growth to slow down. “The Great Depression-induced birth dearth of the 1930s has shrunk the national pool of elderly now of age to retire to the Sunbelt, ” Fullerton said. “And the number of mobile working-age adults is dwindling as graying Baby Boomers accumulate real estate and reach stages in their careers and personal lives when relocation becomes less practical.”

As a result, the rate of increase in the number of Florida residents is projected to decline by one-tenth of a percentage point each year through 1998, he said.

On the other hand, the baby boom echo’ is producing an influx of new students in kindergarten through grade 12 of the public school system sufficiently large enough for school districts to increase hiring of faculty, administrators and support staff during the next two years, West said.

A boom of another sort is affecting state tourism, which is expected to break new records through 1998. The robust outlook is partly due to new attractions scheduled to come on-line and renovations already under way at several destination sites, Fullerton said.

In other positive news, per capita purchasing power in Florida is expected to rise in real terms by more than 1 percent per year through 1998 despite the growth rate declining from 7.6 percent in 1995 to 5.3 percent in 1997, he said.

Total Florida housing starts are predicted to drop off. They are expecting 110,000 to 115,000 new units through 1988, a pace lagging behind 1994-95 levels but above those of 1991-93.