Mixed indicators, optimism
Florida state revenue estimates are up, unemployment continues to grow, economic growth appears to be slowing down to pre-pandemic norms, but optimism abounds with both consumers and business owners moving into the new year. It’s all in this week’s Florida Economy News.
General Revenue Forecast: Citing economic uncertainty in the national economy that is expected to dampen the impact of burgeoning state sales tax revenue, Florida’s Revenue Estimating Conference on Friday still added $502.5 million to the current 2025-2026 fiscal year and $70 million to its revenue estimates for the 2026-2027 fiscal year that begins July 1. Preliminary state budget proposals by the legislature are expected in the next few weeks, with a final spending plan for the next fiscal year by session’s end. The new revenue estimates got a large bump from sales-tax revenue, up $584.5 million in this fiscal year, and up $226.8 million for the next fiscal year. But the impact that federal tariffs will have on state corporate income tax revenue remains uncertain – specifically whether corporations will absorb the cost of tariffs or pass it along to consumers. There’s also uncertainty about how the Federal Reserve will handle interest rates, which impacts the forecast on state earnings from investments, which the conference increased by $114 million for this fiscal year and $29.3 million for the next year. The conference report also noted “continued deceleration in construction and real estate as well as slowing in tourism growth.”
Florida Jobless Rate Up Again: This past December an estimated 486,000 Floridians qualified as unemployed from a larger workforce of 11.2 million people, landing at a 4.3% jobless rate for the state. That compares to a national December rate of 4.4%, down from 4.5% in November. Florida’s number is up from 4.2% in November, 3.9% in September, and 3.8% in August; and up almost a whole percentage point from December 2024’s 3.4% rate. This is the highest jobless rate for the state in more than four years, even with over 75,000 jobs added in the past 12 months. The report showed job losses in trade, transportation and utilities, while job gains were seen in education and health services, leisure and hospitality, and financial activities.
Sunshine State Growth Slowing: With an economy valued at $1.76 trillion, Florida is projected to have continued substantial economic growth through 2026, but the rate may be closer to pre-pandemic levels, according to a Florida TaxWatch forecast. While COVID-19 brought droves of new residents into the state, the report predicts a more modest increase of 2.5 million residents between now and 2034, to a population of about 25.9 million. Higher costs (housing, insurance, taxes) and other pressures are cited for the slow-down. Both total employment and unemployment are expected to rise with the continued growth, a trend also reflected on the county level, where 60 of the 67 counties have gained employment relative to their pre-pandemic peak in February 2020. In a similar vein, wages and spending capacity are expected to rise and taper off over the next several years. Likewise, Florida’s world-famous tourism, which hit a peak of almost 143 million visitors in 2024, is forecast for a slower projected growth of 0.8% in 2026, and then tapering off. TaxWatch projects state GDP will grow, but just not at the breakneck speeds we’ve become accustomed to – expected to rise 2.3% in 2026 and then slow to 1.9% growth by 2034.
A Cautious Optimism: While Florida consumer optimism showed a marked increase from 72.5 in November to 74.9 points in December, sentiment is down 12 points from January 2025. Hector H. Sandoval, director of the Economic Analysis Program at the University of Florida’s Bureau of Economic and Business Research, attributes the fluctuations to a changing landscape – namely significant policy changes (especially regarding trade), a long federal shutdown, interest rate cuts, and the constant inflationary pressures. As Floridians adjust to the bumpy road, their expectations for this new year are up in many categories, including personal finances and U.S. economic conditions. The exception: women, people under 60, and those with under $50,000 in annual income. JPMorganChase’s Business Leaders Outlook survey shows a similar sentiment among Florida business owners, with 67% anticipating profit growth in the coming year. Across the nation, 44% of those surveyed are generally optimistic about the economy, showing a rebounding positivity regarding market forces after a drop last summer.
See you on the trail,
Lisa
LMA Newsletter of 1-26-26
