Floridians are saving less, indicating possible economic slowdown

TALLAHASSEE — The savings rates of Florida residents may be returning to pre-pandemic levels, state economists say, just as the Federal Reserve plans to start shifting its focus from boosting the economy to dealing with inflation.

The savings rate stood at a “below-normal” 7.5% in

September, according to a report by the Legislature’s Office of Economic & Demographic Research released Wednesday. The rate was 7.9% during the 2018-2019 fiscal year.

During the pandemic, people limited movement and spending, and the federal government issued trillions of dollars in stimulus to residents and businesses. The savings rate hit a record 33.7% in April 2020. In July 2021, the figure stood at 9.6%.

The Fed issued a statement Wednesday indicating it will start reducing monthly bond purchases, a practice meant to stimulate economic growth by keeping interest rates low, to focus more on the 5.4% annual inflation rate, the highest in decades.

The state report also said general-revenue tax collections in September were $442.2 million more than had been projected in an August forecast.

“September collections reflect activity that largely occurred in August, which continued to benefit from the most recent round of stimulus checks to households, redirected spending from the hard-hit service sector and some consumers’ ability to draw down atypically large savings that built up during the pandemic,” the report said.

The report continued a series of signs that lawmakers will be flush with cash as they draw up a budget during the legislative session that will start in January.

Economists in August estimated lawmakers would have $2.6 billion more in general revenue than previously forecast this fiscal year, which started July 1, and in the 2022-23 fiscal year.

The revenue is in addition to nearly $6 billion in unspent federal coronavirus stimulus money.

The report pointed to sales taxes and corporate-income taxes for the September gains in revenue.