FT. LAUDERDALE, Fla. – Dec. 18, 2013 – Florida became the third most populous state in the United States in 2013, bumping New York from its long-standing status and positioning the state for increased economic gains in 2014. According to a report released by TD Economics, an affiliate of TD Bank, strong population growth, income growth and reflation in household wealth will drive the Sunshine State to outperform the nation by a considerable margin in 2014 and 2015.
“Florida experienced a watershed year in 2013,” says Beata Caranci, TD Economics deputy chief economist. “After lagging for six years, its economic expansion allowed the state to reclaim its place of being a national outperformer, alongside a population that is estimated to have swelled to the third largest in the nation, second only to California and Texas.”
TD Economics estimates that Florida’s population will stand 20 million strong next year, an important fundamental for the state’s long-term economic outlook thanks to continued strength in consumer spending and housing demand.
The expansion is on track to hit 2.4 percent in 2013 before accelerating to 3.5 percent in 2014 and 4 percent in 2015. That would outstrip the national pace of 1.8 percent, 2.7 percent and 3.1 percent for those three years, respectively. TD Economics expects the housing, retail, tourism, and professional and business service sectors to fuel the state’s growth over the next two years.
Stronger housing demand should also underpin home price gains of 6 to 9 percent over the next two years.
“When it comes to housing, people sometimes can become near-sighted and put too much focus on the recent tapering in housing momentum that followed the sudden rise in mortgage rates over the summer,” says Caranci. “However, looking past the volatility in near-term data, the fundamentals argue for continued strength as we move forward.”
Along with increased demand for existing housing, housing starts will need to more than double just to meet demand, assuming conservative population projections. TD Economics forecasts housing starts will increase 50 percent of current levels by 2015 and reach 120,000 units. Even so, this will leave construction 30 percent below the demographic need.
Housing gains will be broadly distributed, but the Northeast (Jacksonville, Palm Coast), East Central (Orlando) and Southwest (Fort Myers, Naples) regions are likely to experience the fastest growth.
Tied to this housing activity are additional job gains in construction and real estate and leasing, which already account for half the jobs created in 2013. Construction workers are increasingly coming back into demand. After averaging a mere 270 job gains per month in the 2011-2012 period, construction jobs averaged 3,000 per month in 2013. As many as 100,000 new construction jobs could be added before the end of 2015. Most of these jobs will be in residential, but new commercial and infrastructure projects also will require additional staff as Florida reinvests in roads and ports.
As household finances improve across the nation and more consumers spend on vacations, Florida’s outsized tourism market will remain a key contributor to growth. The industry has already been a source of strength in the state for quite some time, as evidenced by being one of the first to recover all of its recessionary job losses. TD Economics believes it may add 80,000 more workers to the tally by the end of 2015.
TD Economics provides analysis of state economic performance and forecasting, and is an affiliate of TD Bank, America’s Most Convenient Bank®.
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