Sales tax data for the first seven months of the year, released by Florida Office of Economic and Demographic Research, confirms our outlook of a gradually strengthening economy, driven by Tourism and Investment-related spending, shown in Table 1. Employment growth, with about 117,500 new jobs in the first 7 months of this year, also supports this trend. The industries more closely associated with Tourism and Investment – Leisure & Hospitality, Construction and Professional & Business Services – have reported the largest increase in employment as we enter the fourth quarter of 2014.
In this issue, WEG preliminarily examines payroll employment as an indicator of economic vitality and of the strength of Florida’s economic base. There are several methods to analyze the competitive economic base of a region. One method is Location Quotient Analysis (LQ). This technique shows, as an example, which industries are more competitive and which industries are lagging, using employment changes in a region relative to changes in the Nation as a whole.
In Florida, the economic base (industries defined as those with “exportable” products and services) is primarily composed of Leisure & Hospitality, Retail, Financial Activities, Construction and Professional & Business Services. These industries are net exporters (sellers) of their products and services outside of the State (to the rest of the U.S. or globally). The first three industries have been expanding their LQ during the 2009-2013 period, indicating growing competitiveness. Professional & Business Services remained steady, but more recent data indicates it is expanding.
Construction, although an “exportable” industry, shows a reduction of its LQ component as a result of the deep negative impact of the Great Recession. However, there are notable increases in Construction employment so far in 2014. This bodes well for the future of the industry and for the positive impact on Florida’s economic base that can be “exportable.”
Retirees living in Florida can be considered part of the State’s “exportable” economic base, since they receive social security checks and, in many instances, dividends from their investments elsewhere. As far as Florida is concerned those are “exportable” financial inflows that generate jobs and income in the State, impacting many industries with a positive LQ.