Florida to Fare Better if Recession Hits
The dark clouds of recession are less likely to rain on economic growth in the Sunshine State than the rest of the United States, according to Jerry Parrish, chief economist at the Metro Atlanta Chamber.
Parrish offered an optimistic assessment of the state of the economy and the outlook for 2024 in a wide-ranging presentation at the Volusia County Economic Development “Q” Breakfast earlier this month.
Before a nearly full house in the Dennis McGee room at Daytona Beach International Airport, Parrish said the strength of Florida’s economy will take some of the sting out of an economic downturn that might be on the horizon. In his overall forecast for the coming year, Parrish, who is well-known to the local business community from his time as chief economist and director of research for the Florida Chamber Foundation, said he believes the Federal Reserve Board is “almost done” with interest-rate hikes, but rates will remain higher for longer than most people expect.
Ongoing concerns about high interest rates and continued uncertainty will bring more financial market volatility in 2024, and the U.S. is more likely to enter a recession than to have a “soft landing” from economic instability, Parrish said.
Parrish said one of the factors influencing economic forecasting is the aftermath of the Covid-19 pandemic. He said rather than looking at current conditions on a 12-month timeline, it is still necessary to go back to pre-pandemic days in early 2020.
“If we only look at the past 12 months, we may overlook some good things that have happened,” he said.
One of those good things is the 728,800 jobs added in Florida since before the pandemic, an 8% increase since February 2020. That easily outpaces the national number of a 3% gain in jobs.
“That is massive,” Parrish said. “A ton, ton, ton of jobs are being created here in Florida.”
Parrish said a lot of those job gains have come in the leisure and hospitality sectors, with Volusia County seeing an 18% increase in employment, compared to 15% growth statewide and 12% nationally.
“So-called ‘revenge travel’ has created a lot of jobs (and) created a lot of income,” he said.
Parrish said the strong employment numbers are indicative of the overall strength of the Sunshine State economy.
“You’ve got a good economy down here that’s been able to take advantage of a lot of good things,” he said.
For part of his presentation, Parrish put on one of his other hats and gave a short tutorial on interest rates and the yield curve, an economic forecasting tool that plots the interest rates of U.S. Treasury securities at a set point in time with bonds of equal credit quality but differing maturity dates. Drawing on his experience as an adjunct in the Master’s of Applied Economics program at Florida State University, he explained that historically when there is an inverted yield curve – when short-term interest rates are higher than long-term interest rates – a recession is imminent.
While the yield curve has been inverted in 2023, Parrish said low unemployment has kept the economy afloat.
“The labor market is far too strong for us to be declared in a recession,” he said.
As far as the future prospects for a recession, while he does see it as more likely than not, Parrish said it is impossible to predict.
“Who knows what’s going to happen?” he said. “We don’t know.”