Economic analyst Hank Fishkind has the Central Florida forecast for 2022
Hank: You know, looking in the crystal ball, it’s really going to be a great year for our economy here in Central Florida, Danielle.
Danielle: That’s great news. Tell me a little bit about why you’re so optimistic about the economic outlook for Central Florida.
Hank: Sure, well, we come into 2022 with a big mount of economic momentum. Real GDP grew at a 7% pace in the fourth quarter, very strong gains in employment, personal income, housing markets remain strong, but the price gains are slowing, Danielle. And similarly, although inflation is running hot, price increases have already begun slowing. And locally, we enjoyed a near record surge in tourism. And that reflects both pent-up demand for leisure travel and big gains in household income and wealth. And this surge came even in the face of the beginnings of the Omicron wave and travel disruptions.
Danielle: Omicron is a big worry for us, with most scientists projecting a continuing acceleration of cases peaking perhaps by the end of January. How will this impact the outlook?
Hank: Well, Omicron is already having the predictable impacts, depressing dining at restaurants and reducing travel according to Google mobility reports. And that’s for the US and all across Central Florida too. Now hopefully, the current Omicron wave will peak soon and fall just as rapidly, which is the pattern that the other variants have followed. And if so, then the Omicron wave will mostly push economic activity that would have occurred in January, into February and March. And that actually will provide some further support to the spring tourism season. And in addition, if the Omicron wave peaks as expected, Danielle, we’re gonna get a big pop in foreign tourists, especially from Canada and the UK, but it’s gonna be really rough sailing for the cruise ship industry. You know, the CDC recommends avoiding cruising and there’s an increasing toll of infections on those cruises. That’s seriously going to crimp volumes throughout the spring, and business travel, you know, that’s going to be impacted negatively as well by this COVID surge.
Danielle: Yeah. And the Federal Reserve promised to increase interest rates this year, at least three times. How will this affect the outlook?
Hank: Well, the increase is overall going to be modest, you know, they’re supposed to be less than one percentage point in total. And because rates are so low now, this one percentage point increase is gonna only have a small impact. I mean, consider the mortgage rates now are about 3.6%. So increase to four and a half percent. That’s still relatively low by historical standards. But what’s more important is that the Fed is acting to restrain inflation by not raising interest rates so much, but by scaling back and eliminating its purchases of bonds, which shrinks the money supply.
Danielle: So looking ahead to the new year that we’re in what worries you most about 2022?
Hank: You know, Omicron of course and waves of infection in the variants are the most troubling. You know, and I also worry that inflation may not unwind as expected, you know, it’s possible that rising wages this year could trigger further price increases, leading to a dreaded wage and price spiral. And then there’s always the risk of a hurricane. And, you know, our recovery remains incomplete, Danielle.
Danielle: You know, what advice do you have for our listeners for 2022?
Hank: Well, for this year, you know, with the very good prospects for a strong economy. This is really the time to seize opportunities to start new businesses and new careers. Also, asset prices are very high, and they’re unlikely to continue to increase as fast as they have over the last few years. So this is a good time to take some profits and to rebalance your portfolio.