Rosy Florida’s economic forecast jeopardized by COVID-19 outbreak, labor shortage and housing costs

Florida economists assessing the state’s tourism, housing and labor sectors say the measures add to a post-pandemic economy poised for a boom.

But, they warned, it could go bankrupt if COVID-19 positivity and hospitalizations are not quelled, labor shortages do not dissipate and new housing inventories are not increased.

In a presentation Tuesday at Florida’s Economic Estimating Conference (REC), Vesselka McAlarney of the Legislative Assembly’s Office of Economic and Demographic Research (EDR) predicted Florida’s economy in the second quarter of 2021 to exceed levels before the pandemic “due to faster-than-expected improvements in economic conditions. activity.”

The REC includes economists from state agencies, the governor’s office, and the EDR who meet regularly to update economic projections. Lawmakers rely on EDR data and REC forecasts to establish the state budget.

Florida is expected to end fiscal 2021 (FY21), which ended June 30, with a growth rate of 1.9%, surpassing the nation’s 1.6%, McAlarney said.

“However, it feels like growth may have already peaked, and we had, as we will see from the charts, significant growth that recovered from the depths of recession last year. “she said. “There are concerns about more restrictions that may set things back. “

Those concerns are the 45,604 new cases, double the number reported the previous week, job by the Florida Department of Health (DOH) for the week of July 9-15. The state’s 11.5% positivity rate is alarming as only 47.8% of eligible Floridians have been vaccinated.

McAlarney said Florida’s $ 90 billion tourism and hospitality industry benefited from the state’s “early” reopening last June and would receive an unforeseen boost when Canadians return. this autumn.

Domestic visitors accounted for 98% of trips to Florida in the first quarter of 2021, according to VISIT FLORIDA, the state’s tourism marketing agency. Domestic travelers made up 89% of visitors to Florida in 2019, he notes.

McAlarney said domestic travelers stayed longer in FY21, on average 6.2 days, than in previous years. In FY20, the average stay was 4 days, she said.

“So domestic travelers are staying longer, anecdotally, because of restrictions in their states or because of remote work opportunities,” McAlarney said. “People, of course, flocked to Florida and stayed there longer. “

The Canadian government announced Monday that starting August 9, fully vaccinated U.S. citizens can visit Canada without quarantine for two weeks. The United States should announce a reciprocal policy.

Each year, about 1 million Canadians spend up to six months wintering in the Sunshine State, contributing an estimated $ 6.5 billion to Florida’s economy, according to the EDR.

Travel by Canadians to Florida for the first quarter of 2021, however, was down 97.2% from 2020, with just 34,000 visiting Canadians, according to VISIT FLORIDA.

“The borders have closed. The border opens. You are going to make a big leap in terms of personnel, ”said Holger Ciupalo, coordinator of the Governor’s Policy and Budget Office.

Construction of new single-family homes increased 30% in FY21 and will rise 6% in FY22, McAlarney said, adding home buying was at “its all-time high.” since the 1990s.

The median price of a home in Florida was $ 321,400, exceeding the median price of US $ 318,000. Home prices will rise until builders build new subdivisions, she said, forecasting a 2.5% price hike over the next two years.

A shortage of existing housing is among the factors driving up costs – and a labor shortage is cited by developers, economists noted, linking “labor availability” to the process of building permit to project the evolution of the market.

Construction typically begins three to six months after the permit is approved, said senior economist in Gov. Azhar Khan’s office, but the labor shortage extends deadlines from six to twelve months after permits are issued. .

Without the labor shortage, “we would have started to see some relaxation of inventory constraints,” he said. “Whatever phenomena are causing this increase, they will soon begin to dissipate. “

Article originally published on The central square.

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