A University of Central Florida economist is projecting Florida’s economy will not rebound until next summer at the soonest, stating “in an effort to ‘flatten the curve,’ we have bulldozed our economy.”
UCF Institute of Economic Forecasting Director Sean Snaith, author of the 2020-23 Florida & Metro Forecast, writes atop the study’s introduction: “The U.S. economy is in a deeper recession than the 2008-09 Great Recession … AND IT WAS SELF-INFLICTED.”
Snaith said federal and state leaders relied too heavily on modeling in creating public health policy, noting one model predicted 2.2 million COVID-19 deaths in the U.S.
As a result, “we implemented policies that shut down large segments of the U.S. economy. In the span of just four weeks, this resulted in 22 million Americans losing their jobs,” he wrote.
Snaith said since models are built on data and assumptions, “in partial defense” of the ever-changing models driving public health policy, he acknowledged the data was “poor,” so it’s “no surprise models built upon it have been way off in their predictions.”
Lessons must be learned, he said.
“COVID-19 is a cautionary tale against using experts’ models that are predicting an apocalypse as a basis for economy-killing remedies without questioning the models, their predictions, and the costs of the proposed remedies is a recipe for policy and economic disaster,” he wrote.
Snaith’s forecast, which included regional and metro area projections, said some areas in Florida have not bottomed out from the COVID-19 shutdown. He estimated Florida’s unemployment rate will rise to more than 10 percent during the fourth quarter of 2020, be about 7.6 percent this time next year and about 3.9 percent in 2022.
Among Snaith’s projections:
• Real Gross State Product (RGSP) will contract in the first two quarters of 2020 and 5.2 percent overall for the year. RGSP will not reach pre-pandemic levels until the third quarter of 2021 and will grow by 6.7 percent overall next year.
• Payroll job losses in Florida between the first quarter of 2020 and the fourth quarter of 2020 will be nearly 767,000.
• The sectors expected to have the largest job losses in 2020 are professional and business services (211,700); leisure and hospitality (152,300); trade, transportation and utilities (83,300); construction (48,200); manufacturing (30,200); and financial (22,000).
• New passenger car and truck registration will fall by more than 580,000 registrations during the first half of 2020.
• Retail sales will plunge by a quarterly average of $38.4 billion during the first half of 2020.
Snaith wrote much remains unknown in compiling the forecast, noting the economic nosedive is “not a function of the natural mechanisms of the business cycle” and has created a recession “the likes of which we have never experienced before.”
Key determinants in “the length and depth of the recession will depend on how long the public health measures remain in effect,” he wrote.
If widespread restrictions begin lifting in June, he wrote, the economy will begin to grow in the third quarter and accelerate in the fourth quarter “when the labor market recovery begins.”
“It could be better,” Snaith writes. “Testing reveals mortality rate on par with seasonal flu. Lockdowns broadly lifted in May. Economy begins to accelerate in June.”
Or, it could be worse. “Lockdowns extend through summer or, even worse, a second round of lockdowns implemented at a later date,” Snaith warns. “If the latter occurs, recession becomes depression.”
