Regional Report: Healthy Growth Marks Florida’s Economy
Companies in diverse industries are attracted to Florida’s low taxes and extensive international ties.
Oluwaropo “Abbey” Omodunbi, an economist with the PNC Financial Services Group, studies the Florida economy. He says the state’s steady recent growth and diversity of thriving industries help contribute to its overall economic strength and resilience. Florida’s GDP of $917 billion in 2018 was the country’s fourth largest.
“Florida’s economy continues to grow at a healthy pace,” Omodunbi says. “Economic growth has been slowing as the local economy is highly synchronized with the nation’s economy. Moderate costs of living coupled with a high industrial diversity will enable Florida to outperform the nation over the long run.”
Jamal Sowell, president and CEO of Enterprise Florida Inc., says Florida gained 224,000 new jobs in the past year and is seeing “numerous inquiries from businesses, both in-state and out-of-state, particularly the U.S. Northeast, about expanding in Florida, and, in the case of the latter, moving corporate headquarters here. Florida has rigorously pursued a path toward economic diversity over the past two decades and it shows.”
Omodunbi says Florida’s “robust gains” in population — Florida has surpassed New York as the third-most-populous state in the U.S. — are supporting particularly strong growth in the state’s healthcare, transportation, and construction industries. The state’s massive leisure and hospitality industry also continues to perform well, he notes, but “will likely cool due to reduced domestic tourism as uncertainties cloud the national economic outlook.” According to Sowell, the state had a record 125 million tourists visit in 2018.
Florida’s “robust gains” in population are supporting particularly strong growth in the state’s healthcare, transportation, and construction industries. Florida’s best-selling points to businesses are its growing industrial diversity, low taxes (no personal income tax, no corporate income tax for limited partnerships and sub-chapter S-corporations), and its close international ties, particularly with Latin American countries. Related to trade, Florida’s extensive infrastructure offerings, including airports and commercial seaports, provide links to markets around the world, Sowell says. And, this past July, the U.S. Department of Transportation awarded nearly $100 million in funding for two (Space Florida and PortMiami) major infrastructure projects in Florida. Last year, Sowell says goods valued at $153.5 billion passed through Florida’s airports and seaports, with $73.5 billion in exports that originated in Florida leaving the state for 190 different countries. More than 58,000 Florida companies export from the state.
“International trade has a significant positive impact on Florida’s economy,” notes Sowell. “We are seeing positive results year over year as we increase export markets for goods originating in Florida. At Enterprise Florida, we facilitate Florida businesses that want to participate in international trade shows and export missions overseas. This year, we took partners with us to Morocco, Vietnam, and we will be in Colombia in November. In fact, last May, Governor Ron DeSantis led the largest delegation we have ever taken to Israel. Small and medium-sized Florida businesses are the biggest benefactors of these efforts.”
Florida is particularly proud of the mark that the aviation and aerospace industry has made on the state. Florida is home to 505 general aviation airports, 19 commercial airports, and two spaceports. Lockheed Martin Fleet Ballistic Missile (FBM) and Boeing Space both recently moved their headquarters to Florida, and Spirit Airlines announced a decision to build a new headquarters and expand its footprint in Broward County.
“Florida has one of the most robust aviation networks in the world with virtually all the major leaders within the industry with a footprint in Florida,” Sowell says. “We are experiencing significant growth and our manufacturing base has grown at three times the national average over the past three years, in part due to our aviation and aerospace firms.”
The Florida & Metro Economic Forecast released in September 2019 projects professional and business services, which includes jobs such as those in accounting, law, engineering, and architecture, to be the state’s fastest-growing sector through 2022, averaging 5.4 percent growth. The state also is experiencing keen expansion of its fintech sector. For instance, So-Fi (Social Financial Inc.) recently announced that it would open operations in Jacksonville.
Fulfilling Workforce Needs
Like many states, Florida also faces challenges finding enough skilled workers to fill all of its businesses’ available jobs, according to Michael Myhre, CEO of the Florida SBDC Network, which provides support for entrepreneurs and small businesses with no-cost consulting, training, and research. Myhre notes that 52 percent of the state’s residents are 40 or older and Florida has “significantly more individuals age 65 and older than the nation as a whole.”
Florida is particularly proud of the mark that the aviation and aerospace industry has made on the state. “Florida’s small businesses face unique challenges, including finding talent and accessing capital,” says Myhre. “These challenges illustrate the need for Florida’s business, government, and economic development leaders to work together to ensure our state’s small businesses grow, succeed, and create more jobs for Florida’s families.”
In light of the demand for labor, a talent network of customized training programs is designed to meet the specific needs of businesses. Florida also has a strong education system with a host of public and private higher-education institutions and a high school graduation rate that is more than 15 percent higher than it was in 2010. In fact, U.S. News & World Report rates Florida third in the country for its educational offerings.
According to Omodunbi, the state’s wages are growing slower than the national pace and if the state’s unemployment rate continues to decline, employers could feel pressured to raise wages to attract workers. In the face of possible challenges, however, he believes Florida appears equipped to tackle what lies ahead.
“With both the national and local labor markets in good shape, and consumers’ balance sheets in better shape than prior to the Great Recession, the U.S. economic expansion should continue through at least the rest of this year and into 2020,” Omodunbi concludes. “Florida’s economy is highly synchronized with the nation’s economy and the local economy is well-positioned heading into the next domestic slowdown.”
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