Florida transplants will help the state’s economy weather a recession

This comes as the Sahm Rule – a closely watched recession indicator created by Claudia Sahm, a former Federal Reserve economist – was triggered on August 2 after a surprise rise in US unemployment. To be sure, economists, including Sahm, are conflicted about whether it’s right this time.

Florida’s economic growth has outpaced the nation annually for the past 11 years, according to Wells Fargo. More than that, of the state the economy grew at the sixth-fastest pace in the country in the first quarter of this year.

Jackie Benson, an economist at Wells Fargo and one of the report’s authors, told Business Insider that Florida’s growth is due to an influx of new residents. The state’s above-average population growth helped it outpace the nation in real GDP growth, Benson said.

Population growth isolates the state

Florida had the second-fastest state population growth in 2023, after South Carolina, according to data from the U.S. Department of Commerce and Wells Fargo.

There were nearly 195,000 domestic movers and 178,000 foreign movers net moving to Florida in 2023, according to Wells Fargo. From 2000 to 2019, the average number of domestic relocations in Florida was approximately 140,000.

Benson said an influx of residents means more workers in the workforce, more people buying homes and more people spending money at the grocery store.

“This creates a feedback loop that insulates an economy from a broader macroeconomic slowdown that could drag certain states down,” Benson said. “If you have more population growth, your chances of growing better through it go up.”

Wells Fargo said population growth is a tailwind for Florida, and post-pandemic changes in migration have benefited Sun Belt states, including the Southeast and Southwest. However, Benson said people moved to Florida before the COVID-19 pandemic.

Business Insider previously reported on the move to Florida from coastal hubs like New York and California.

“A lot of people are looking for family or home buying reasons, just quality of life or lower cost of living,” Benson said. “That’s what drives them south, and with Florida, it’s a lifestyle, right? Warmer weather and a more relaxed atmosphere”.

Florida movers might do better than average

Wells Fargo did not forecast a future recession, Benson said. However, a slowdown is expected.

“We expect the momentum to slow,” Benson said. “This is largely driven by a slowdown in the labor market that is already starting to happen.”

Wells Fargo economists noted in the report that Florida’s unemployment rate has recently risen with national trends and may be losing momentum, but is still “comfortably below” the national average.

“There are some signs of caution, particularly when it comes to rising unemployment,” Benson said. “I don’t think Florida will be completely insulated from this slowdown, given that the labor market is showing signs of cracking, but I would expect it to perform better than other states do.”

In 2023, nearly half of Florida’s job gains were concentrated in health care, construction and government. Construction jobs grew 5.1 percent year-over-year, the fastest rate of any job in the state.

South Florida in particular is doing well. The Miami metro area was responsible for nearly 30 percent of the state’s job gains in 2023, according to Wells Fargo.

Certainly, if the country went into a recession, Florida would be affected.

Job growth in Florida’s information and financial sectors lags in 2023, largely due to high interest rates, according to Wells Fargo. However, Benson said he expects the Federal Reserve to cut rates in September, which would bode well for those industries.

One sector most at risk in the event of a slowdown is Florida’s leisure and hospitality sector, however, international travel could help keep it afloat.

Are you a Florida entrepreneur who has seen your business change due to the influx of new residents? This reporter wants to hear from you. Please contact at [email protected].