TBO.com - TBO is Tampa Bay Online

Construction Drop Erases State's GDP Growth In 2007

ADVERTISEMENT

By MICHAEL SASSO

The Tampa Tribune

Published: June 6, 2008

TAMPA - The construction industry was a huge drag on Florida's economy in 2007, causing the state's economy to flatten after several years of strong growth, according to new data from the federal government.

Florida's real gross domestic product last year was about $609.9 billion, which is flat when compared with 2006, said the U.S. Department of Commerce's Bureau of Economic Analysis. That zero percent growth ranked Florida 47th of the 50 states in GDP growth rate, ahead of only New Hampshire, Michigan and Delaware, which all had negative growth rates.

Florida-based economists on Thursday were not surprised by Florida's poor economic performance. However, Scott Brown, chief economist for Raymond James & Associates, was struck by the extent to which construction is dragging down the economy.

According to the Commerce Department data, construction hurt Florida's real GDP growth by 2 percentage points. In other words, without the negative effect of construction, Florida's real GDP might have grown by 2 percentage points. Brown said the construction industry only hurt the broader U.S. economy by about 1 percentage point.

Other industries in Florida helped to slightly offset the drag from construction. Health care and social assistance added 0.45 percentage points to economic growth, and the retail trade and information sectors each added 0.31 percentage points, the data show.

Until 2007, Florida had fairly strong economic growth. For example, the state's economy grew by 5.4 percent in 2004, 7.3 percent in 2005 and 3.6 percent in 2006.

Overall, real GDP growth in the United States was 2 percent last year, according to the Commerce Department. Utah saw the strongest growth in the country, with a 5.3 percent rise in its real GDP. Utah's economy was helped by its strong manufacturing, retail trade, and real estate, rental and leasing industries. The worst performing state was Delaware, which saw its real GDP fall by 1.6 percent over the year. It was hurt by a drop in finance and insurance.

Sean Snaith, an economist and director of the University of Central Florida's Institute for Economic Competitiveness, said he is more concerned with Florida's continuing job losses than last year's GDP.

Florida has been losing jobs every month since August, according to the Florida Agency for Workforce Innovation. Snaith said he expects the job losses to continue through fall, after which the state will see flat or very slight job growth for at least a year. By 2010, Snaith expects to see "Florida-like" job growth that outpaces the country.

State gross domestic product is the sum of consumer, business and government spending on final products, as well as investment and net foreign trade. "Real GDP" refers to gross domestic product expressed in 2000 dollars and adjusted for inflation. The government benchmarks it to 2000 to better compare the economy from year to year, said Ralph Stewart, a spokesman for the Bureau of Economic Analysis.

Florida's current-dollar gross domestic product was $734.5 billion.

Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT