Strong population growth, declining unemployment, a slow but steady increase in the population’s GDP and the thriving technology and financial sector in South Florida are the main drivers of the area’s economic growth after the lows of pandemic.
According to the Bureau of Workforce Statistics and Economic Research of the State of Florida, unemployment rate was 4.6% last October with 8,902,400 nonagricultural jobs, a 0.2% recovery from September and a 1.2% recovery from last year. The Miami-Miami Beach-Kendall area was at 3.8% of unemployment, according to the preliminary data, a 6.2% change from last year.
In terms of GDP, Florida was expected to grow 2.5% in the 2019-2020 fiscal year but declined 4.3% in the first quarter of 2020 and 30.1% in the second quarter, according to the Florida Legislature Office of Economic and Demographic Research, published last August. After 2020’s third quarter, Florida GDP rebounded by 33.4%, as people returned to work, and the year ended with a 3.1% growth it the state’s GDP.
South Florida represented a third of the state’s GDP, and Miami-Dade County represents 15.74%, being the “state’s hardest hit county by most metrics,” according to the report.
Mark Vitner, managing director and senior economist at Wells Fargo, said Florida’s economy is rebounding very strongly. “The pandemic brought the long expansion that we had in the prior decade to an end, but in Florida the contraction was relatively short,” he said. “We saw economic activity decline for two months, it felt very sharply, but then it came back really quickly.”
The first quarter of 2021 brought Florida a 7% increase in GDP, ranking 15th in the nation in GDP.
“The output of the economy has recovered faster than employment has because we haven’t added back all the jobs in restaurants and bars and entertainment venues, in care salons and nursing home and childcare centers…,” Mr. Vitner said. “Almost all of those industries employ large number of part-time workers, and the pay is relatively low in many of the occupations in those industries, and they haven’t come back.”
“But the technology sector has been booming,” he added. “A lot of it has been in South Florida, but also in Tampa, in Saint Petersburg, in Orlando, in Jacksonville. We’ve seen a lot of financial services companies; hedge funds, private equity firms and many managers have relocated.”
A press release from the state of Florida in October said the state had gained 72,700 private-sector jobs in businesses over that month. Florida’s private-sector employment increased 5.6%, with 411,400 jobs, over the last year.
Business services added 10,400 new jobs and the hospitality industry added 26,600 new jobs in October, the press release said. According to the Florida Department of Economic Opportunity, there is an 11.2% increase in real estate jobs from the last year.
“The financial sector is well above where it was prior to the pandemic, as well as the tech industries,” Mr. Vitner said. “We had strong job growth in July and August, and a spectacular summer in tourism, the strongest it’s ever been.”
Nonetheless, many people across the country have chosen to retire early rather than go back to work after the post-pandemic era, Mr. Vitner said.
“This is seen particularly among persons over 55, with the stock market as strong as it’s been. Many of those folks have opted to move to Florida and they’re semi-retiring; they’re looking for a next act.”
Florida’s growth in population has mostly come from net migration, according to a Florida Economic Overview report by the Florida Legislature Office of Economic and Demographic Research. “Florida’s population growth of 387,479 between April 1, 2019, and April 1, 2020, was the strongest annual increase since 2005, immediately prior to the collapse of the housing market and the beginning of the Great Recession,” the report said.
In addition, homeownership during last year was at 68.7%, according to the same report. In 2021, it went down to 68.1% for the first quarter and 67% for the second quarter.
“We’ve had, with the economy recovering, drops and then very strong pick-ups in the housing [market],” said Mr. Vitner. “Apartments, particularly in downtown Miami, saw vacancy rates rise during the pandemic as people didn’t want to spend a lot of money to be in a small apartment when they couldn’t get out and about.”
“As the economy reopened, we saw demand revise and we’ve seen vacancies rates come down sharply and rents rise sharply,” he continued. “And there is a lot of apartment construction – not so much condo construction – going on.”
The single-family market concerns him, he said. “We’ve seen a lot of folks buying properties and converting them into single-family rentals and that’s restricting the supply of homes for sale. It really has a compounding effect, because typically someone buys a house and stays there for 7 or 10 years, then sells it and moves to another house. But when these homes get converted into rentals it reduces the pool of homes that are going to be recycled through over time.”
“So right now,” he concluded, “it seems like inventories have been persistently half of where they were in prior cycles.”
Source: Miami Today