The data is strong but confidence is fragile as the economy — or at least how voters feel about it — is at its familiar place as the most important issue as an election year gets underway.
The post-pandemic recovery has been incredibly kind to Florida's economic statistics. The state's gross domestic product, measuring Florida's economic output, grew by a 6.1% annual rate in the third quarter, easily out-pacing the national GDP growing at 4.9%. While Florida's economy is a fraction of the nation's, it has grown at a faster rate for almost three years straight.
Still, Florida's 6.1% growth rate was not the fastest among large states. Texas' 7.1% GDP change was tops.
And, even while the Sunshine State's overall economic output is very strong, personal income growth merely matched the national figure of 3.5%. Personal income measures salaries, wages, dividends and rental income. It is a broad measurement of how much money a person earns as income. While keeping pace with the national growth, it has slowed in Florida over the past several quarters, adding to the affordability challenges (more on that below).
Historically Low Unemployment
The single most important gauge of economic health is employment. And by that measure, South Florida is booming. Employers added more than 44,000 jobs over the past year and the unemployment rate is close to 2%. That is a ridiculously low number. And it’s been below 2% in Miami-Dade County since July.
READ MORE: How South Florida is a study in economic contrasts for the Biden administration
Stubborn High Inflation
But inflation. Inflation has been stubbornly high here. While it has come down from its pandemic high, South Florida still has the highest overall inflation rate in the nation. In October, consumer inflation measured 7.4% – over twice the national level. Even stripping out food and energy prices, inflation still is uncomfortably high.
Hot Housing Prices
Inflation has remained high thanks to another feature of the regional economic strength — housing.
Home prices shot higher as people moved to Florida during COVID lockdowns elsewhere. That migration has continued post-pandemic. Florida added more than 365,000 residents in 2023. That is 1,000 new neighbors every day for a year. More people moved to Florida than any other state.
That demand has been behind the hot housing market. It’s one reason why prices have kept going up despite higher mortgage rates. Usually, higher borrowing costs would put pressure on home sellers to accept lower sale prices. But with so many people wanting a home here, and so few homes for sale, prices keep climbing.
There’s not a credit crunch for home buyers. Borrowers are lending the money if buyers can find a home to purchase. And for people who already own their homes and have a mortgage, odds are they have a really low interest rate from a couple of years ago. That probably means they can better afford their home, reducing the threat of a spike in foreclosures. And it means a smaller supply of homes for sale, which means buyers are competing over price for those homes that are for sale.
Vulnerable Consumer Sentiment
Steady interest rates, and certainly lower rates, should help consumer attitudes. They will help home borrowers afford more. But that will also help keep prices up. With a strong job market and people still moving to Florida, 2024 is shaping up to be another tough year for anyone looking to buy a home, especially first-time buyers.
Even while the economic data is strong, people don’t seem to feel very confident. Consumer sentiment in Florida was inching up as the year ended, yet it remains much lower than it was just a couple of years ago. And it hasn’t recovered from the drop-off when COVID began.
The University of Florida surveys consumers each month. Optimism about their financial situation a year from now has been growing. However, Floridians are less enthusiastic about the national economy one year from now.
The only issue Florida voters are more concerned about than the overall economy is housing costs — and housing is an economic issue thanks to the affordability crisis and the cost of home insurance.
But housing costs are not really an issue for national elections. Permitting and zoning regulations are local issues. Those impact how easy it is to build more homes and condos. And property insurance, as we’ve seen for years, is about geography and state regulations.
Still, inflation and jobs will loom large during the presidential election. Republicans will hit Democrats over prices. Democrats will talk up employment numbers.
