Jerry Parrish, an economist with Florida State University, returned to speak at the annual Lay of the Land Conference last month in Lakeland, Florida. Parrish is always a popular speaker for his big-picture economic outlook and engaging style. He is not a dull economist.
Parrish said the major themes to watch for in 2022 are the Federal Reserve interest rates; energy and food prices; and the probability of a recession. The economy is juiced up with the amount of money that has been pumped into the system by the U.S. government and Federal Reserve, and it has kicked off the highest inflation in a half century.
Can interest rate hikes slow down inflation? Can the Federal Reserve balance rate hikes without derailing the economy? Parrish said those are tough questions, and the Federal Reserve historically has not been able to find that balance. But if recession does occur, Parrish believes Florida is positioned better than many other states to weather the storm due to its good governance and sound fiscal policy.
The positives that Florida offers are leading to a population boom. No state income taxes, the weather and its business-friendly environment pushed the state’s population growth by nearly 15% from 2010 to 2020. That’s nearly 3 million more people and the reason why Florida’s real estate market is currently so hot.
However, people in Florida are worried about the economic outlook. Parrish said is shows in the latest consumer sentiment numbers. The number tracks how confident people feel about the economy.
“Right now, we are at 69.7% consumer sentiment in Florida, which is not terribly high,” Parrish said on April 20. “What is interesting is when we look at the number pre-COVID, it was 102.3%. During the worst of COVID, it was down to 76.3%, which we are lower than now … But consumer spending is important. Will consumers continue to spend when their outlook is not as high as it used to be? What will it do to tax revenues? All of this is really important (in the direction the economy goes).”
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