In this week’s Economic Report, Dr. Rick Harper discusses the factors behind Florida’s inclusion on a list “The Biggest Losers: The 5 Worst State Economies,” as reported by CNN Money.
Each of the states is listed in part due to the decrease in their Gross Domestic Product (GDP) between 2007 and 2013.
Nevada topped the list, with a 10% drop in GDP. Florida followed with a GDP of -7%. Also in the top five are Connecticut, Arizona and Michigan.
“It’s really been all about the bust in construction jobs, driven by an excessively exuberant bubble in the housing market,” says Harper noting the drop substantial dip in GDP particularly in Florida, Nevada and Arizona as a consequence of the Great Recession.
Construction, Real Estate and Wholesale Trade were listed as the primary drains on Florida’s economy.
Harper says there is evidence of strong recovery in the housing market in some areas of Florida. For example, Harper notes the increasing demand from Latin America for condos in the Miami market, which had been expected to be a bust with excess inventory for decades.
He says Northwest Florida wasn’t as badly affected by the ‘bubble.’ “Part of that was just dumb luck that we didn’t have available real estate on the beach front,” says Harper pointing to national parks and military installations. Harper adds that home prices have firmed up and real estate sales in the region have been growing for about four years.
Ironically, says Harper, as construction continue to recover from the 53% decline in jobs when the state economy was at its worst there is now a shortage in the number of workers with the skills to get the jobs.
On the upside, Florida experienced gains in Health Care. “Health care is a persistent job gainer. It did not lose jobs during the recession in any substantial number. It’s on its usual upward trajectory,” Harper says.
Looking down the road, Harper believes more pressure for cost containment and the increased use of technological innovations in health care, some of the current job gains in the industry will slow.
Dr. Rick Harper is director of the University of West Florida Office of Economic Development and Engagement; email@example.com.