Florida’s economy is expected to bounce back
UCF professor says restoring power is key
TALLAHASSEE — Floridians from Jacksonville to Orlando to the Keys are still reeling from Hurricane Irma’s impact, but the state’s economy should rebound fairly quickly, one economist says, as soon as the lights come back on.
“The short-run things that are important is getting power back on throughout the state and addressing infrastructure damage that has occurred,” said University of Central Florida economics professor Sean Snaith. “Depending on what the extent of that is around the state that’ll determine how long of a recuperation period we have to go through.”
The historic storm left millions of people without electricity. Flood damage affected homes in nearly every corner of the state, and many buildings in the Keys were destroyed.
And although the frantic preparation for Irma led to massive spending on supplies, the loss of sales taxes from disruptions to business as 7 million
Floridians were ordered to evacuate means tax revenues could fall short of expectations, producing a budget shortfall for the state next year.
State economists estimated a small $52 million surplus — a slight fraction of an $83 billion budget — for the fiscal year that begins next July 1, but that was before Irma hit.
“I would advise you to assume that $52 million is completely gone,” chief legislative economist Amy Baker told lawmakers Friday.
Total damages from Irma won’t be known for weeks, but Baker said she’s seen estimates that place the costs below Hurricane Andrew’s $46 billion — in 2017 dollars — but above Hurricane Wilma’s $25 billion price tag. That would make Irma the second-costliest hurricane in state history.
The boost in spending that comes from rebuilding and construction will come slowly, spread out over the next two to three years, Baker said, making next year’s budget outlook much tighter than it would have been.
“I don’t feel much better about this forecast than I did about the forecast I was watching last week,” quipped Sen. Bill Galvano, RBradenton.
In addition to lost revenue, the state faces costs that could run into the billions, eating away at the $3.6 billion in reserves lawmakers set aside for the current year.
The state must match 25 percent of the funds for FEMA assistance, Baker said. There are other costs that FEMA likely won’t pay for such as beach restoration. One estimate for those costs from a powerful hurricane ran to $80 million but that was a storm that hit just one part of the state, she said.
Yet historically, Florida’s economy rebounds from major storms over the course of “months, not years” after a hurricane, Snaith said.
“You look back at [hurricanes] Andrew or Charley, and it does have a short-run impact in the labor markets,” Snaith said. “We’re likely to see job losses in the very near term as a result, but in a matter of months, those tend to be reversed.”
The country was in a recession when Andrew hit in 1992, and Florida took nine months to get back the number of jobs it had before the storm. Amid the heyday of the housing boom in 2004, after Charley and the three other hurricanes hit, the state took just one month to reach its pre-storms employment figures.
Job numbers for August announced Friday show Florida has an unemployment rate of 4 percent and a job growth rate of 2.6 percent over the past 12 months, 1.2 percentage points ahead of nationwide job growth in that period.
“If you’re already on a weak foundation as far as the economy is concerned then the damage can be more significant, but where we stand now is on pretty solid ground, economically speaking,” Snaith said.
The short-term keys for a sharp recovery, Snaith said, are getting the power back on statewide and repairing roads, sewer systems and other infrastructure.
In the months to come, however, Florida’s recovery will be largely tied to the tourism industry.
Baker noted that 76 percent of the state’s general revenue comes from sales taxes, and 13 percent of that comes from tourists.
But Snaith expects the tourism industry and the rest of the state to recover after some short-term pain — just as it always does after a hurricane.
“That first cold front that blows across the Canadian border is going to send people packing [to Florida],” Snaith said. “The baby boomers are still getting older, we still have the beaches — although some of them may have been eroded — but you know, it doesn’t snow, and Irma didn’t change any of that.”