February 21, 2020

BBVA economist reflects on Florida economy

In a world economy that expects continued challenges from global economic policies and geopolitical uncertainty, the economists at BBVA Compass Bank expect the state and local economies to do well in the next few years.

Shushanik Papanyan, senior economist at BBVA Research USA, says that stability or rigidity in the local economy means that went things went sour in 2009 and 2010 for the U.S. economy, Gainesville did better than most places.

The local economy is built around medical, governmental and educational jobs, not transportation and manufacturing. That rigidity protected local jobs during the downturn and provides a comfortable growth rate now that the national economy is strengthening.

Housing prices and labor statistics held firm and now they are showing modest growth rates, according to Papanyan.

The state’s broader economy is growing rapidly right now, according to the report. Transportation and construction services are direct beneficiaries of declining energy prices and the consumer states, like Florida, are leading the economic recovery.

Additionally, this region is less impacted by international economic threats. Falling stock prices in China, south European debt and very low commodity prices are affecting economies throughout the world, but Florida’s consumer based economy is counter cyclical to commodity prices.

“Falling oil prices negatively affect states like Texas, but states like Florida that use energy benefit,” she adds.

The data provided by BBVA better GDP and employment growth in Florida compared to the rest of the country and Gainesville looks even better. GDP growth in the Florida is forecast to grow in the range of three to four percent while US GDP growth should be in the two to three percent range. The Gainesville economic outlook is less than two percent, according to BBVA.

Housing prices are another area where Gainesville is expected to fare better than Florida, in general. The outlook for housing price increases in the next 12 months is about seven percent in Gainesville, compared to a two percent gain in the US, again according to documents published last week by BBVA.

“There is some upward pressure in home prices,” Papanyan added. “Prices didn’t fall dramatically, so they will increase slowly”

BBVA Research has compiled a ranking for metropolitan statistical areas and Gainesville ranks 91st in overall economic activity. The data measured structure, growth, financial, industry and cycle. Gainesville’s highest ranking was for business cycles and the lowest ranking was for financial.

BBVA Compass Bank has four locations in the Gainesville market.

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