WINTER
EDITION 2017
F LORI DA’S
2017
ECONOMIC OUTLOOK
MISSION
To provide a one-stop shop for the latest news and valuable
insight on Florida's economy and financial health.
RESOURCES
Chief Financial Officer Jeff Atwater is committed to making Florida more consumer and business friendly by ensuring
consumer rights and protections, reducing regulatory burdens, and fighting fraud.
The Division of Consumer Services' Your Money Matters
website offers a variety of financial tools, games, and
resources about credit and debit, saving and spending,
planning for live events and other topics.
http://www.myfloridacfo.com/Ymm/
Transparency ensures accountability, and Floridians
can see how the money they send to their government is
spent by viewing state budgets and contracts.
http://www.myfloridacfo.com/Transparency/
Consumer Helpline: 1-877-693-5236
The Division of Investigative & Forensic Services (DIFS)
encompasses all law enforcement & forensic components
of the Department. Report suspected insurance fraud to
DIFS through our online referral application or by calling
the Fraud Hotline (1-800-378-0445).
The Division of Consumer Services helps consumers
make informed insurance and financial decisions. Our
dedicated and experienced staff are trained in the 26
different categories of insurance. Consumer assistance
and protection is our mission.
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Florida’s Bottom Line is produced by the
Florida Department of Financial Services (DFS)
in association with:
For updates on Florida's economy, please visit www.MyFloridaCFO.com/FloridasBottomLine/
Letter from the CFO
Dear Fellow Floridians:
The beginning of a new year is an important time to reflect on what we have accomplished and what
we want to achieve in the year ahead. Over the past year, Florida’s economy has seen profound growth
in many areas and we’re entering 2017 well positioned to take advantage of these gains and continue
to grow.
Looking back on 2016, we see that Florida’s economy is on the right track: private sector job growth
increased and outpaced the nation; the housing market continues to grow; and our unemployment
rate has fallen to its lowest levels in eight years. This economic momentum sets the stage for Florida
to continue its hard work throughout 2017.
This edition of Florida’s Bottom Line is focused on the opportunities that lie ahead in the coming
year as well as highlights of the progress that we have made in the past year. Inside, you will find an
economic forecast and expert analysis on Florida from a leading economist, insightful outlooks on
key emerging trends, commentary on what a new president may mean for Florida, and a look back on
Florida’s economic achievements in 2016.
As we embark on this New Year, it is important to acknowledge that Florida’s economic future will
continue to be shaped by the hard work and perseverance of Floridians. It is your dedication that
not only allows us to build upon our accomplishments, but reach new heights of economic success
and prosperity.
INSIDE
STORIES
Florida's Economic
Outlook
SEE PAGE 1
Changing Federal Red
Tape & Florida
SEE PAGE 3
Paving the Path to
Florida's Future
SEE PAGE 5
I wish you and your family a Happy New Year.
Sincerely,
Jeff Atwater
Chief Financial Officer
State of Florida
SUBSCRIBE TO FLORIDA’S BOTTOM LINE »
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JANUARY
FLORIDA'S ECONOMIC OUTLOOK
By Sean Snaith
Director of UCF's Institute for Economic Competitiveness
1/9/2016
SOUTHWEST
FLORIDA’S
ECONOMY LOOKS
STRONG
Herald-Tribune
Florida’s economy enjoyed another solid year of growth
in 2016. The latest job data for November showed that the
Sunshine State added 263,900 jobs year-over-year, a 3.2
percent increase. The U.S. economy experienced job growth
of 1.6 percent over the same time frame.
This growth has been diversified with every industrial sector,
with the exception of the Information sector, contributing
to this job growth. The Information sector, home to
traditional media companies including newspapers and other
periodicals, continues to struggle with structural change
in how information is gathered and disseminated faces
declining print advertising revenue that is not being offset by
rising online advertising.
1/11/2016
FLORIDA RANKED
IN TOP 10 FOR
BEST STATE
ECONOMY
Business Insider
Since November of 2010, Florida has created 1.27 million jobs
and in 2017, the state is well poised to add to this total.
Florida has managed this economic performance in the
midst of a historically weak U.S. economic expansion. In the
wake of a largely unexpected outcome of the Presidential
election, the U.S. economic environment is poised to improve
its performance and should transform from a headwind to a
tailwind that will help Florida’s economy further expand.
Sean Snaith, Ph.D.,
is the director of
the University of
Central Florida’s
Institute for Economic
Competitiveness and a
nationally recognized
economist in the field
of business and
economic forecasting.
To the surprise of many, Donald Trump won the 2016 presidential election and will be the
country’s 45th president when he is sworn into office in January 2017.
What does a Trump administration mean for the economy in the U.S. and Florida?
1/29/2016
FLORIDA RANKED
BEST STATE IN THE
NATION TO RETIRE
Wallet Hub
A definitive answer is not immediately available as many of the economic proposals laid out
during the campaign remain short on particulars, however based on what we do know most of
the proposed economic policies should boost economic growth in the U.S. and here in Florida
as well.
What are the major planks of President-elect Trump’s economic platform and what impact
would they likely have on the economy?
Tax reform proposals include a reduction of the number of income tax brackets. The plan
would cap the level of deductions and the standard deduction would more than double,
eliminating the need for many taxpayers to itemize reducing the burden of filing taxes for
most taxpayers.
Business taxes would also change substantially. Corporate income tax rates would fall
from one of the highest in the world at 35 percent to 15 percent. To encourage investment, a
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line
1
lower 10 percent tax would be levied on the repatriation of profits that are held overseas by
American companies who currently have $2.5 trillion in offshore tax havens.
Other tax policies include allowing for full expensing of plant and equipment for U.S. based
manufacturers and allowing small businesses to pay a 15 percent rate on business income
instead of paying the personal tax rate on this pass-through income.
FEBRUARY
The incoming administration has proposed a $1 trillion dollar infrastructure investment
program. The $1 trillion dollar infrastructure plan is nearly a tenfold increase in the level of
infrastructure spending that was included in the American Reinvestment and Recovery Act
of 2009. Coupled with tax reform this represents a double barreled fiscal stimulus.
The roll-back of the regulatory morass that has flourished over the past two administrations
by the Trump administration is, in my mind, potentially the most powerful of all the incoming
President’s proposed economic policies.
I have written extensively on the Affordable Care Act and the Dodd-Frank financial
regulatory reform law and the adverse consequences of these laws for the economy. The
policy uncertainty that we have created via Dodd-Frank, the Affordable Care Act, and
thousands upon thousands of pages of new rules and regulations have weighed down this
recovery. The promised repeal of many of these regulations will free the economy from the
inundation of red tape that has entangled and hobbled economic growth.
2/4/2016
FLORIDA RANKED
5TH BEST POLICY
ENVIRONMENT
FOR
ENTREPRENEURS
AND SMALL
BUSINESS
Small Business &
Entrepreneurship Council
The Trump administration’s stance toward international trade could be the Achilles’ heel of
their economic platform.
Strong statements, many directed toward China, toward enforcement of violations of existing
trade agreements and alleged currency manipulation with tariffs and taxes, set the stage for
retaliatory action by countries that were subjected to such penalties.
The worst case scenario, an all-out trade war where the U.S. and its trading partners
impose tariffs and other barriers to trade upon one another at such levels that international
trade plummets.
The devil is in the details and details are still scarce. But what we do know about the proposed
economic policies of the Trump administration suggest that economic growth should be
significantly higher. If a trade war can be avoided, and I think it ultimately will, Florida should
reap the benefits of a stronger national economy.
We have revised our economic outlook for Florida upward in the wake of the election and
expect that real state GDP will expand at 3.8 percent in 2017, 1 percent faster than our
projection for the national economy. Job growth in Florida will also continue to outpace the
national economy and is expected to be near 3 percent in the upcoming year.
2/18/2016
FLORIDA CRACKED
100 MILLION
TOURIST MARK
IN 2015
Sunshine State News
MARCH
Strong population and job growth that will fuel an acceleration in housing starts in Florida in
2017 as the state remains in catch up mode in the housing sector.
The domestic environment will become more conducive to economic growth in 2017, but a
stronger dollar and a global economy that is peppered with potential pitfalls are significant
risks on the economic horizon.
All told, I am quite optimistic about the economic outlook
for Florida’s economy. 2017 should be a good year.
3/4/2016
FLORIDA BASKS
IN TEXAS-STYLE
RESURGENCE
Wall Street Journal
FOR MORE INFORMATION, PLEASE VISIT WWW.IEC.UCF.EDU
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 2
APRIL
4/13/2016
FLORIDA EARNED
AN “A” IN FISCAL
TRANSPARENCY
U.S. PIRG
4/19/2016
STUDY: TAMPA
AREA FOURTH
FASTESTGROWING JOB
MARKET IN U.S.
Tampa Bay Times
MAY
CHANGING
FEDERAL
RED TAPE
& FLORIDA
By Patrick McLaughlin
Senior Research Fellow at the Mercatus Center
Regulations were a central theme of the 2016 election.
While the new administration’s timeline for implementing
regulatory changes remains unclear, the likelihood of any
changes occurring in the administration’s first year largely
depend on the legal mechanisms at its disposal. Many
regulatory policies may be quickly abandoned with a stroke of
the pen. A much larger number of regulations were produced
by regulatory agencies through the regulatory process (often
called the “notice-and-comment” process). Changes to
such rules often require several years, with no guarantee
of success. Congressional actions, ranging from repeals of
specific rules to reform of the regulatory process itself, may
also alter the regulatory landscape.
So what can we reasonably expect in the first year?
5/4/2016
FLORIDA’S
ECONOMY GROWS
BEYOND TRADE
AND TOURISM
Sun Sentinel
Executive Orders
Patrick McLaughlin,
Ph.D., is a Senior
Research Fellow at the
Mercatus Center.
Executive actions can quickly alter the regulatory landscape.
A new administration typically issues an immediate “stopwork” order, directing agencies to temporarily freeze ongoing
rulemakings for inventory and study. Historically, most of
these are eventually restarted, although perhaps after modification or reprioritization.
Executive orders (EOs) have become increasingly important to the regulatory landscape.
The outgoing administration relied heavily on regulation by “phone and pen,” using EOs to
implement changes that resemble regulations in all but name. Executive actions like EOs
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 3
circumvent the regulatory process, so the new administration could similarly use EOs
to rescind those of the previous administration. Some orders may be revoked quickly,
including one that increased the minimum wage for federal contractors, a secretarial
order that suspended coal leasing on federal lands, and several EOs that relaxed
immigration enforcement.
For decades, EOs have required executive branch agencies to submit a benefit-cost analysis
to OMB for review for some new rules. These requirements could be expanded to include
independent agencies like the SEC and the CFTC. This would be particularly relevant to
Florida—these agencies regulate important sectors of Florida’s economy, such as financial
services (responsible for over 11 percent of Florida’s economic growth in recent years) and
the commodity futures vital to Florida’s agriculture.
Rollback
Incoming administrations are fairly limited in their ability to rapidly change agency-issued
regulations. To modify rules already in effect, administrations must have agencies go through
another notice-and-comment rulemaking, a process typically taking a year or more.
There are some exceptions—rules that were finalized but subsequently blocked by court
injunctions. In some cases, if these rules remain unresolved, the new administration could
effectively abandon them by dropping any further engagement. The Overtime Rule and the
“Persuader” Rule may be in this group. The Clean Power Plan and the Waters of the United
States rule are also in litigation, but those rules’ association with statutory mandates would
make their complete abandonment more complicated.
MAY
5/9/2016
FLORIDA RANKED
2ND BEST STATE
FOR BUSINESS
Chief Executive Magazine
JUNE
Congressional Action
Regulation will be a priority for the Congress too. Congress may immediately use the
Congressional Review Act (CRA) to repeal recently finalized regulations with simple
majority votes, although its use will likely be limited. The CRA requires up to ten hours of
floor time for each rule considered—time that will be needed for confirmation of appointees
and other priorities. It would thus be surprising if more than a handful of rules are reviewed
under the CRA.
We may see several regulatory process reform bills introduced. A few, like the Regulatory
Accountability Act, are focused on improving the quality of information—e.g., costs and
benefits—used in new rulemakings. Others would require Congressional approval for new,
major regulations or would permit judicial review of an agency’s economic justification for
a new rule. And some would create a process for trimming red tape. Recent studies have
shown regulatory accumulation—the build-up of red tape—to substantially slow economic
growth, so these changes could substantially effect Florida’s economy.
6/1/2016
FLORIDA RANKED
6TH MOST
FISCALLY STRONG
STATE IN NATION
Mercatus Center
Change will be slow
Changing the regulatory landscape is like turning a massive ship: sheer size and momentum
make only minimal adjustments possible in the short run. Many presidents and congresses
have been frustrated in their attempts to alter the course of the regulatory state, with
hundreds of thousands of employees spread across scores of agencies and a complex
web woven by decades of regulatory accumulation adding to its momentum. Unless new
legislation directly alters the regulatory landscape (as happened with partial deregulation of
rail, air, and truck transportation in the Carter and Reagan years), any rapid changes to the
regulatory state would represent significant departures from historical patterns.
6/28/2016
FLORIDA ON
PACE TO SWELL
INTO $1 TRILLION
ECONOMY
Miami Herald
FOR MORE INFORMATION, PLEASE VISIT WWW.MERCATUS.ORG/
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 4
JULY
7/7/2016
FLORIDA'S 2015
GDP GROWTH
RANKED THIRD
IN NATION
Orlando Sentinel
PAVING THE
PATH TO
FLORIDA’S FUTURE
By Mark Wilson
President & CEO Florida Chamber of Commerce
AUGUST
8/19/2016
FLORIDA RANKED
IN TOP 10 FOR
MOST FREE STATE
IN NATION
Cato Institute
8/25/2016
FLORIDA RANKED
2ND BEST LARGE
STATE FOR
STARTUP ACTIVITY
Kauffman Foundation
Florida is known for its beautiful beaches, welcoming
weather and no personal state income tax. But the
Florida Chamber of Commerce knows the Sunshine
State is also the crossroads for global trade – which
is why many job creators are growing and relocating
to Florida.
Florida is a national leader in quality roads and bridges,
is home to some of the world’s busiest airports, an
expanding rail system, 15 seaports, and the best space
port on earth -- all of which support international trade.
By 2030, Florida is projected to grow by six million
residents, and welcome 150 million visitors every year.
Now is the time to focus on the future – not only to
avoid the headaches and costs that come with roadway
congestion, but also to increase market share and
job opportunities.
Mark Wilson is
President and CEO of
the Florida Chamber
of Commerce.
Florida faces two possible futures. One in which
Florida continues investing in transportation – laying
the groundwork for growth and emerging technologies like self-driving vehicles,
expanded seaport activities, increased air travel and smarter transportation options.
Or the other, in which our transportation networks become congested, Florida loses
its place as a global leader and opportunities pass us by.
The Florida Chamber’s International Division believes in Florida’s future, but we
also know our future is fragile and our competition is real.
Recently during the annual Florida Chamber Foundation Transportation Summit,
Florida Department of Transportation Secretary Jim Boxold encouraged Florida’s
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 5
business community to remain focused on Florida’s global competitiveness by
securing Florida’s transportation and infrastructure future.
“The Florida Chamber Foundation’s focus on a long-range vision and their
commitment to solving transportation issues has been instrumental in keeping
Florida globally competitive. Transportation is the key to job growth, keeping
our families safe and maintaining a good quality of life. As we look at the future of
transportation, the technology tsunami is right around the corner. The business
community is at the forefront of these changes and discussions like these are
important in order to be ready for whatever the future has in store for us,” Secretary
Boxold explained.
Consider this…An efficient transportation system helps manufacturers deliver their
products on time – keeping cost low and business growing. This allows manufacturers
to explore new markets and create high-paying jobs for more families.
The Chamber Foundation predicts that over the next three years, the world will see
one billion new consumers. And, the global economy is expected to double in size over
the next two decades. Ninety-five percent of the word’s consumers live outside of the
United States, and international trade allows Florida companies to reach them.
AUGUST
8/31/2016
FLORIDA’S
TRANSPORTATION
INFRASTRUCTURE
WON AWARD FOR
EXCELLENCE
American Association
of State Highway and
Transportation Officials
For the third straight year, Florida taxpayers have invested over $10 billion in state
transportation funding. However, innovations and consumer behavior are changing
the way people and goods are moved around Florida. Yet, with 1,000 new people
moving to Florida every day, keeping up with Florida’s infrastructure investment
needs can be a big challenge. How, for example, will Florida fund road maintenance
and improvements when electric cars use our road, but don’t generate gas taxes?
SEPTEMBER
Florida has also made substantial investments in deepwater seaports. With nearly
15.2 million cruise passengers in 2015, and substantial shipments of containers and
bulk shipments all around the world, Florida ports are more competitive than ever
and ready for future growth. In fact, these investments have resulted in more than
200,000 new jobs since 2012.
9/2/2016
And, investments in Florida’s other trade infrastructure – inland ports, intermodal
container transfer facilities, and rail – has helped create additional Florida jobs.
According to the Business Roundtable, international trade supports more than 2.5
million Florida jobs.
Improved infrastructure also yields benefits other than jobs for Florida. Florida
hosted 106.6 million visitors from other states and nations in 2015, yielding more
than $11 billion in tax revenue, $6 billion in state tax receipts, and $5.3 billion for
local governments.
Whether you’re safely transporting residents and visitors, transporting goods,
exploring space, or expanding international trade, Florida’s transportation systems
are at the intersection of job growth and global competitiveness. Florida can
continue to lead the way for the nation by
continuing to be a model for how
states can improve their infrastructure
and international competitiveness for
the United States. When we get it right,
Florida wins.
FLORIDA’S FIRST
HURRICANE IN
A DECADE
The Atlantic
9/22/2016
FLORIDA RANKED
AMONG TOP
10 STATES FOR
DOING BUSINESS
Area Development
FOR MORE INFORMATION, PLEASE VISIT WWW.FLCHAMBER.COM/
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 6
FLORIDA’S
BUSINESS
RENT TAX
SEPTEMBER
9/28/2016
FLORIDA RANKED
4TH BEST
BUSINESS TAX
CLIMATE IN
THE NATION
Business Insider
By Dominic Calabro
President & CEO of Florida TaxWatch
OCTOBER
10/31/2016
FLORIDA’S JOB
GROWTH RATE
LEADS NATION
Spacecoast Daily
NOVEMBER
11/16/2016
FLORIDA RANKED
BEST STATE
FOR ECONOMIC
GROWTH
PROSPECTS
Forbes
Florida can boast about a lot of things. We are a premier
tourist destination with an improving education
system and an attractive economic climate that creates
thousands of jobs every year. Florida companies
enjoy some of the most business friendly tax rates and
regulations in the country, which has propelled the
state’s economy from one in decline during the Great
Recession to one of strength. The Sunshine State
consistently ranks among the best states to do business
in the country and shows no signs of slowing down.
However, the state can do more to improve the business
climate to benefit both businesses and workers. One
critical improvement is to reduce or eliminate the
Business Rent Tax (BRT). While some cities and
counties in other parts of the country levy similar taxes,
the BRT is the nation’s only statewide sales tax on
commercial leases.
Dominic Calabro is the
President & CEO of
Florida TaxWatch.
The tax is six percent, but counties have the discretion to levy additional taxes on
commercial leases, causing some businesses to pay up to 7.5 percent in additional
taxes. The BRT can add tens of thousands of dollars in additional operating costs and
puts smaller businesses at a disadvantage to bigger companies who have the resources
to afford the additional tax. It also distorts the natural economics of anchor stores for
shopping centers or malls.
Businesses must make tough decisions when determining where they wish to open up
shop and for those looking to move to Florida, regulations and taxes like the BRT could
force them to consider elsewhere. According to a survey cited in a Florida TaxWatch
report, occupancy costs were the second most important factor when businesses
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 7
determined where to locate. Clearly businesses place a high premium
on occupancy costs and the BRT lessens the attractiveness of the Sunshine State
for relocation.
To address this issue, Florida TaxWatch, the state’s independent, non-partisan
government watchdog, has called for the reduction or elimination of the BRT. The
reduction or elimination of the BRT is supported by numerous lawmakers and was
a campaign promise of Governor Scott. The Governor also included this Florida
TaxWatch recommendation in his Florida First budget recommendation for the 2016
Legislative Session.
While eliminating the BRT would require a significant restructuring of revenue and
expenditures, even a slight reduction would benefit a large number of businesses.
All businesses that rent commercial real estate pay the sales tax on those rents,
regardless of their profitability or financial shape. However, smaller and newer
businesses would benefit the most from a reduction since many cannot afford to
purchase real estate and therefore must lease space to conduct business.
The Legislature has considered cuts to the BRT in previous sessions but despite
support from many legislators, none have made it to passage. In the 2016 Legislative
Session, the House originally had proposed a cut to the BRT from six percent to five
percent in fiscal year 2016-17. After much debate and deliberation, this provision was
not included in the final package signed into law by Governor Scott. The House also
attempted a small reduction in the tax (0.2 percentage points) in 2015 but, like the
one in 2016, it was also taken out of the final tax package that passed during the
Special Session.
Some might say a tight budget outlook could make this difficult though. In order to
find funding for a reduction in the BRT, we must find effective cost-savings that will
allow this reduction to occur. The findings in the Government Efficiency Task Force
report are an excellent place to start, with recommendations saving the state upwards
of $2 billion.
If the BRT can be cut, it would boost our economy, help small businesses and create
jobs, and improving Florida’s standing as the best state to live, work and play.
NOVEMBER
11/19/2016
FLORIDA
ECONOMY
GROWING IN THE
‘RIGHT’ WAY
Tamps Bay Times
DECEMBER
12/20/2016
FLORIDA’S
POPULATION
CONTINUES TO
RAPIDLY INCREASE
WPBF
You can check out Florida's
2016 Government Efficiency
Task Force Report here!
12/27/2016
FLORIDIANS FEEL
POSITIVE ABOUT
ECONOMY, FUTURE
WFSU
FOR MORE INFORMATION, PLEASE VISIT WWW.FLORIDATAXWATCH.ORG
Jeff Atwater | Chief Financial Officer
Florida’s Bottom Line 8
WINTER 2017
PRIVATE SECTOR
JOBS CREATED
237,100
PRIVATE SECTOR
JOB GROWTH
PRIVATE SECTOR
REAL GDP GROWTH
m
2.3% m
m
mmm
FLORIDA BUSINESSES
RAISED MORE THAN
$1 BILLION
HIGHEST
Private Sector
Job Growth
in Nation
Higher than
the national
average of 1.7%
3.5%
FL
Faster than the national average of 1.2%
2.5
MILLION
16th largest economy globally
Fourth largest economy in the nation
BUSINESSES
POPULATION OF
20.6 MILLION PEOPLE
IN VENTURE CAPITAL
1,007 people move to Florida every day!
247,000
HOMES
104,200
NEW HOME
PERMITS ISSUED
MEDIAN HOME PRICES
UP 10%
TO $220,000
SOLD
2
nd
SECOND BEST
STATE FOR BUSINESS
6 th
4
th
FOURTH BEST
BUSINESS TAX CLIMATE
SIXTH BEST
FISCAL CONDITION
Source: Bureau of Labor Statistics Dec. 2016 | Bureau of Economic Analysis. 2Q-2016 | PWCMoneytree 3Q-2016 | U.S. Census Dec. 2016 | FL Realtors Dec.2016
JEFF
ATWATER
Jeff
Atwater
| Chief Financial Officer
CHIEF FINANCIAL OFFICER
For more information about Florida’s economy, please visit
Florida’s Bottom Line 9
www.MyFloridaCFO.com/FloridasBottomLine/