POPULATION GROWTH SLOWDOWN COULD PUT THE BRAKES ON FLORIDA’S ECONOMY
Last week the Census Bureau announced that the US population grew by 1.5 million from 2018 to 2019, which was the slowest rate since 1917. The sharp slowdown was caused by a sharp drop in international migration to 569,000 last year, down from over 1 million. And for the first time in decades, natural increase- the number of births minus the number of deaths- was less than 1 million in the US, due to an aging population of baby boomers. And Florida’s population growth slowed by nearly 100,000 from 322,000 in 2017-18 to 233,000 last year.
Economic commentator Hank Fishkind, president of Fishkind Litigation Services, tells 90.7’s Matthew Peddie the slowdown in population growth is a surprise, and has economic implications for Florida.
Hank Fishkind: It is a real surprise, Matthew, you know, the magnitude of the slowdown was surprising. It’s a bit disquieting. And all of this comes at a time where we’ve had continued economic growth, low interest rates, we would expect population growth to be accelerating, not slowing down.
Matthew Peddie: Well, let’s drill down a little bit to international migration. You kind of highlight that as a factor in the slowdown in population growth, what’s going on?
HF: Well, it appears that the Trump administration’s migration policies which were designed to slow international migration are working surprisingly quickly, and by a large amount. It’s also surprising that after years of decline that was recently accelerated by the hurricanes, Puerto Rico’s population actually increased by 340 last year, Matthew.
MP: Well that’s interesting. And what about Florida’s population slowdown too, because we are a state which, we thrive on growth, right?
HF: Yeah we’re dependent upon growth, and that population slowed by a third, by almost 100,000 slower, and that was really surprising. And again, all of the economic factors would suggest that Florida’s population would continue to grow strongly. We have very low interest rates, we have low inflation, and the sales of existing homes in those parts of the country where people move to come to Florida, where they can sell their homes, those housing market conditions are good. So all of those things would suggest that our population growth would stay very strong, but instead growth has slowed sharply. And this marks the third year in a row that Florida’s population growth, while still strong, you know, has been decelerating. And, you know, this is really unprecedented. I mean, consider the fact that last year was population growth of 233,000, while it ranked Florida second in the whole United States behind Texas for total growth, that number is below average for Florida. Our average rate of growth since 1970 has been 300,000 compared to 233,000 growth last year, Matthew.
MP: Okay, so why do you think we’re seeing this rapid reduction in the population growth in Florida, over the last few years?
HF: Yeah, well, we’ve seen a slowing of both international migration and domestic migration. Now the domestic level of migration has come down from 216,000 at its peak in 2016 to 134,000 last year, but it seems to have stabilized, the domestic piece, but the International piece, which peaked at 160,000 in 2016, you know, it’s fallen by half to 88,000 this past year, and it continues to decline.
MP: And we talked a little bit about the impact of population on the outlook for 2020 last time we spoke, Hank, but let’s dig into that a little further. I mean, what are the economic implications of that slowdown in US population growth?
HF: Well, there’s huge implications for both the nation and for us here in Florida, Matthew, I mean, consider first at the national level, slowing population growth means less demand for everything. More importantly, on the supply side, the growth of the US economy on the supply side, it’s a function of the number of hours worked in productivity gains, productivity gains have been stuck at less than 1% for 20 years. So that’s not going to change probably. The tax cut act of 2017, which was supposed to stimulate investment and productivity, did not do that. So the other piece of the puzzle is hours worked. Hours worked are largely a function of the growth in the total number of people because there’s a certain limit, as to how many hours people can work in a week or a month or a year. So when we have slow international migration and slower population growth in the United States, it’s going to give rise to slower growth and GDP. And as you and I have discussed a couple of times, you know, Florida’s growth trajectory is very tightly linked to the growth trajectory of the US. Now for Florida, it’s even worse because our state is somewhat more dependent upon population growth than the nation as a whole. So when population growth slows, we feel it both because the national economy slows, and because our local economy slows.
MP: So either way, you look at this, is this a bad thing for Florida?
HF: Yeah, this can’t be considered a good thing. I mean, we’ve had slowing growth for three years at a time where national economic conditions would tell us we should have had the same or higher growth. So something structural is going on. Part of it is the structure of the population, the baby boomers and delayed migration and retirement. But there may be other things going on too at the national level. Matthew, and and we’ll just have to monitor it carefully.
MP: Hank Fishkind, thank you so much.
HF: Thank you.