Floridas top economists expect the modest growth in the economy to slow in coming years as the European crisis escalates and Congress and the White House -- almost regardless of the occupant -- remain divided on long-range fiscal plans.
For legislators in the Sunshine State, that could mean a reduction in revenue when they begin to craft the states next fiscal plan in 2013 -- with totals even lower in subsequent years.
Members of the Florida Revenue Estimating Conference agreed Tuesday to accept the baseline of IHS Global Insights economic forecast, but expressed concern that some of the projections are a little too optimistic.
Given our experience, said Amy Baker, the states chief economist, I just dont have real strong faith that its going to hold quite as smoothly as they portend in their forecast.
Global Insight expects European leaders will be able to ease through the current fiscal crisis along the Mediterranean, and the lame-duck Congress will simply delay the search for economic solutions -- by extending existing tax cuts and approving a new debt ceiling -- until the new Congress is seated in 2013.
The economic forecast comes as the Florida Chamber of Commerce released a survey that economic uncertainty is the No. 1 concern of small businesses.
Small businesses have overwhelmingly identified economic uncertainty and the inability to obtain financing as the top obstacles preventing them from hiring and growing, Tim Giuliani, chamber Small Business Council staff director, stated in a release.
The chambers quarterly survey, conducted electronically, indicated that only 31 percent of the more than 800 respondents believed their business was better off today than six months ago. The same percentage, 31 percent, expects to hire in the next six months.
On the positive side, only 4 percent have plans to lay off employees. However, that's up from 1 percent in March.
IHS Global Insight, the subscription service used by Floridas economist projects, has since December reduced the potential for a recession from 35 percent to 25 percent, pointing to increased consumer spending due to lower gas prices and a reduction in the unemployment rate, which is forecast to only dip from its current 8.2 percent to an 8 percent mark by the end of the year.
The report is part of the foundation that economists use to provide forecasts of where the states revenues may be headed. Members of the estimating conference will meet again later this month to give an outlook designed more specifically toward Florida.
Among the Global Insight forecast:
The national unemployment mark will only drop to 8 percent by the end of the year, down from the current 8.2 percent.
Disposable income increased due to lower oil prices -- every 10 cent drop in pump prices equates to an $11 billion tax cut.
Global Insight didnt make any changes to its forecast due to the recent U.S. Supreme Court ruling on the Affordable Care Act, also known as Obamacare, as they had already projected the law to proceed.
Baker said that Global Insight indicates there will be much slower growth coming to the state even though the economy has shown signs of exceeding expectations in recent quarters.
This one is looking ahead saying youve had a good year, but things are going to deteriorate a little bit from here, which is consistent with what weve seen, Baker said. We did really well for revenue collections in 11 and 12, but looking forward there are some reasons its going to be slowing down a little more than what we had.
The two biggest risks that the state has been tracking all along: the federal government being able to work out its financial hurdles to avoid going over an economic cliff, driving the nation back into recession, and a further slowdown in international trade -- which would impact U.S. manufacturing -- due as Europe continues to face a mounting crisis that has spread to Spain and Italy.
Global Insight projects Greece will exit the euro zone without problems in 2013. Baker noted, we dont expect things to go as smoothly.
Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.
