Florida’s coronavirus recovery won’t be as bad as Great Recession, state economists say
TALLAHASSEE – Here’s the bad news about Florida’s pandemic-ravaged economy: State lawmakers are facing a $ 5.4 billion drop in revenue, tourism will not recover for at least two years, and the unemployment rate will continue through 2027 doesn’t drop to nearly 4 percent.
Here’s the good news: the effects are not expected to be as deep or to last as long as the Great Recession.
That’s the sober prognosis that lawmaker’s chief economist Amy Baker gave the state lawmaker on Thursday, six months after the state coronavirus pandemic.
In just two months, the pandemic shutdown saw the state’s unemployment rate rise from a 50-year low to a 50-year high, Baker said. As a result, sales taxes fell dramatically and the state government is facing a projected revenue decline of $ 3.4 billion for the current fiscal year and a deficit of $ 2 billion for the next year.
How Governor Ron DeSantis and lawmakers will fill these budget gaps is unclear. The Republican-controlled House and Senate have refused to meet again until November, when the election ushers in new leadership in the House and Senate – and a presidential race is decided.
So far, they are pinning their hopes on using $ 5.8 billion of federal CARES Act funds allocated by Congress to help fill the budget. The money can only be legally spent on pandemic-related expenses such as protective gear and testing. However, they expect Congress to amend the law so they can use it to fill in the budget gaps.
However, it is also unclear how much of the $ 5.8 billion would be available. DeSantis refused to say how he was spending the money, saying that everything was already “committed”.
State Senator Oscar Braynon, D-Miami, asked his Republican counterparts on Thursday why they still didn’t know how DeSantis spent the money.
Florida’s unemployment rate.
“I’m not even saying that I disagree with how this money is being spent because I don’t know exactly how or where we’re going to use it,” Braynon said.
Senate budget chairman Rob Bradley, R-Fleming Island, later said lawmakers expect Congress to amend the CARES bill so states can use the money to fill budget gaps.
The state’s economic forecast is based on some large assumptions. It is believed that a vaccine will be available to the public by next summer and that the state will not experience a second recession – which some economists are predicting. The projection also does not take into account a major natural disaster such as a hurricane that could wipe out state reserves.
Despite these assumptions, Florida’s tourism sector is expected to slowly recover from next summer. Tourists flying to the state, including those from overseas, won’t visit Florida until a year after a vaccine is released, Baker said. She said the estimate is based on studying previous disease outbreaks.
“We believe tourism will take two to three years to recover and it will be the sector that has longed to recover,” said Baker.
The unemployment rate, which reached 13.8 percent in April, has fallen steadily since then. It is expected to fall to 7.8 percent between April and June next year and to nearly 4 percent by 2027. That’s faster than the Great Recession, which took about nine years to drop to 4 percent.
While the state’s unemployment rate will fall faster than it did during the Great Recession, the average Floridian income never recovered from pre-recession levels. Because the state relies so heavily on low-wage jobs, the state’s median income is only 87.4 percent of the national average, a figure that has been falling for three years, according to Baker’s report.
The “only” thing that has spared the Floridians from a deterioration in income this year, according to Baker, was the additional $ 600 weekly unemployment benefits and $ 1,200 business checks distributed at the start of the pandemic. However, the $ 600 benefits expired in July, leaving unemployed Floridians more reliant on the state’s unemployment benefits, one of the stingiest in the country at up to $ 275 a week.
Bradley, who will be stepping down in November, said the state’s benefits should be increased, and the new Senate minority chairman Gary Farmer, D-Lighthouse Point, said the Democrats would propose that the amounts increase during the next legislature increase.
Despite the state’s future, Bradley said Florida is still in better financial condition than many states, and that the state will continue to attract people from New York, California, and Illinois.
“The future is bright for the Sunshine State,” he said.