A report on the state gross domestic product was released the past week by the Legislature’s Office of Economic and Demographic Research. The report also shows, despite efforts to reduce the size of government, the government sector is a growth engine for the state since 2006, while the private sector’s output has been flat.
The office is the Legislature’s research arm forecasting economic and social trends that affect policymaking, revenues and appropriations. It analyzes statistics from the U.S. Department of Commerce Bureau of Economic Analysis. Florida’s GDP is the sum of all the goods and services produced in the state.
Florida’s total GDP rose by 0.77 percent per year from 2006 through 2011 to $754.3 billion in current dollars, the report shows. That was helped by 6.01 percent annual growth in government output to $97.3 billion in 2011.
The private sector grew by only 0.1 percent a year over the five-year period. The report does not break down the government output by federal, state and local sources. While the private sector slowed down, government accounted for 12.9 percent of Florida’s total economy in 2011, up from 10.5 percent in 2006 That made government Florida’s secondlargest industry behind real estate, which accounted for 15.6 percent of the state’s GDP in 2011. However, real estate’s share of the GDP dropped from 16.8 percent in 2006. That’s because the output for real estate and rental and leasing fell by 1.19 percent a year from 2006 through 2011 to $117.4 billion.
Not surprisingly, the only sector to record a sharper decline was the related industry of construction, which dropped by 14.5 percent a year over the five years. Construction’s share of the state’s overall GDP fell from 7.7 percent in 2006 to 4 percent in 2011.
The biggest privatesector growth industry was health care and social assistance, which rose by 6.4 percent a year to $66.3 billion in 2011 The industry accounted for 8.8 percent of the state’s GDP in 2011, up from 7.1 percent in 2006.
The industry-by-industry trends in Florida are similar in many ways to the nation as a whole, although government surpassed real estate as the largest sector nationwide with 12.6 percent of total output in 2011.
The one significant difference between Florida and the rest of the country is that Florida has a smaller manufacturing base. Manufacturing’s share of the economy was unchanged nationally and in Florida over the five years, but manufacturing still ac counted for 12.3 percent of the nation’s GDP in 2011, while manufacturing only produced 5.1 percent of Florida’s State GDP.
It’s been four years in a row now that some economists have been calling the U.S. housing bottom without success. The real estate shadow inventory and the fact homeowners are paying mortgages worth less than the value of their homes are continued risks in the housing market. Until these issues play themselves out, the housing market is far from reaching a bottom here in the U.S. Looking at the Case Shiller Index, concludes, It fell again and the economists who created the index point out that, even though the rate of the fall in home prices slowed, home prices still managed to hit a new record low. Although there are improvements, 17 of the 20 major cities the index follows are still in a downtrend in terms of housing prices.“The other critical factor is the shadow inventory that will hit the housing market over the next few years, The shadow inventory is comprised of bank-owned real estate and current homeowners who are delinquent on their mortgage payments. The number of homeowners who are delinquent over 60 days has increased from last year. The real key is how quickly those bank-owned homes will hit the market.”What is clear i is that there are a lot of homeowners in distress in the housing market, and there are many homes in the hands of banks.“If prices were to rise, some of these homeowners will then try to sell, further putting pressure on the housing market and home prices tumble.