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June 2014

EXECUTIVE SUMMARY
The Florida economy accelerated moderately during the first
quarter of 2014. All components of the state economy, as
defined by the Florida Office of Economic and Demographic
Research, are on an upward trend led by investment and
tourism spending. The most notable characteristic of this
expansion is steady growth, which has not yet reached the
heights of the pre-recession economy. The pre-recession
economy was not sustainable, based on housing and financial
speculation. The post-Great Recession gradual expansion is
more sustainable. There are no signs of a boom-and-bust
performance, with its sequel of a short-lived prosperity
followed by disruptive declines in employment and
productivity. After a long period of recovery, Florida is poised
for a sustainable expansion driven by tourism, international
activities and investment.
GRAPHICAL ANALYSIS
Rising employment is making a major contribution to
the expansion as it constitutes a driver of consumer
spending. Figure 1 shows Florida’s payroll employment
outpacing U.S. employment growth since April 2012.
Barometer of Consumer & Investment Spending Categories:
Trend is Positive and Widely Diffused
Florida Taxable Sales
Trend
Florida Index of Consumer Spending, of which: 
Retail Sales

Durable Sales

Tourism & Recreation

Total Investment, of which:

Business Investment in Plant and Equipment

Building Investment (Construction Related)

=Moderate Growth - = Strong Growth
Source: The Washington Economics Group Trend from EDR data.









Growth of the Florida Index of Retail Activity, a broad measure
of consumer spending, averaged 6.6 percent in 2012 and 6.3
percent in 2013. The expansion of 5.8 percent in the first
quarter of this year follows a trend, started in November 2010,
with growth consistently above 5.0 percent. Increasing
employment is a game-changer for consumer spending and
overall growth in the economy.


Figure 1.
Source: Bureau of Labor Statistics.
Figure 4.
Source: Florida EDR.
Figure 2.
Source: Florida EDR.


AN ANALYSIS OF TAXABLE SALES TRENDS
SHOW AN ACCELERATING
ECONOMIC RECOVERY
IN FLORIDA
An Analysis of Taxable Sales Trends Show and Accelerating Economic Recovery
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Total Retail Sales
Total Retail Sales grew by 5.3 percent in the first quarter of
this year. Non-durable sales expanded by 3.3 percent after
remaining essentially flat in January. The data on Figure 3
confirm the strength of durable sales with a strong growth
of 8.2 percent.



Tourism and Recreation Taxable Sales
Tourism and Recreation spending is a mainstay of the Florida
economy. Taxable sales grew strongly by 6.9 percent in 2012
and at a still strong pace of 6.1 percent in 2013. In the first
quarter of this year, Tourism and Recreation have shown
growth of 6.4 percent relative to same quarter 2013, stronger
than 5.4 percent in the same period of the previous year.




According to VISIT FLORIDA, the number of visitors to Florida
grew by 2.0 percent in the first quarter of 2014. The number
of domestic visitors expanded by 2.0 percent, overseas visitors
(except Canada) by 1.8 percent, with Canada visitors by 1.6
percent. In January and February of this year tourism/travel
expenses in Florida amounted to $13.6 billion, a solid increase
of 7.2 percent over the same period of the previous year.
(Figure 4.)

Total Investment Taxable Sales
Investment is the long-term engine of the economic expansion
in Florida, with strong growth of 8.6 percent in 2013, which
compares favorably to growth of 4.8 percent in 2012. This
category expanded by a solid 7.4 percent in the first quarter of
this year, stronger than 7.1 percent in the same period of the
previous year. (Figure 5.) This development is positive for the
sustainability of the economic recovery.



Construction Investment Taxable Sales
Among the components of Total Investment, construction has
taken longer to recover. However, it accelerated sharply by
15.4 percent last year (from a low base), the first double-digit
growth since 2005. In the first quarter of this year it was
growing by 9.7 percent, considerably below the 12.8 percent
posted in the same period of the previous year. This signal of
greater moderation is a positive development, since it helps to
avoid another unsustainable boom. The desirable performance
for construction investment would be a more gradual, but solid
expansion. (Figure 6.)

Figure 3.
Source: Florida EDR.
Figure 4.
Source: Florida EDR.
Figure 5.
Source: Florida EDR.
An Analysis of Taxable Sales Trends Show and Accelerating Economic Recovery

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Business Investment Taxable Sales
Business Investment also accelerated notably, by 6.5 percent
in 2013, after an expansion of 3.8 percent the previous year.
Growth of 6.7 percent in the first quarter of this year is stronger
than 5.4 percent in the same period of the previous year. This
sector encompasses investment in plant and equipment. WEG
expects brisk expansion of this sector throughout the year
(Figure 7) as businesses retool utilizing the latest technologies
to increase productivity.










Notes
This analysis intends to take the pulse of the Florida economy,
utilizing the state taxable sales compiled by the Florida Office
of Economic and Demographic Research and other useful
indicators from U.S. government agencies.
Retail Index
The index is constructed in order to smooth the volatility in the
taxable sales data and thereby to allow comparisons on a
monthly basis. The index is constructed by aggregating the
categories of autos and accessories, other durables, tourism
and recreation and consumer nondurables. This grouping
represents the bulk of non-investment spending and is
analogous to personal consumption. The sum of these four
categories is seasonally adjusted and a four-month moving
average is taken.
Tourism and Recreation
The category of "tourism and recreation" taxable sales includes
hotels and motels, bar and restaurant sales, liquor stores,
photo and art stores, gift shops, admissions, sporting goods,
rentals and jewelry stores.
Building Investment
The category of "building investment" taxable sales includes
sales by building contractors, heating and air conditioning
contractors, insulation, well drilling, electrical contractors,
interior decorating, paint and wallpaper shops, cabinet and
woodworking shops, soil, lumber and building suppliers and
roofing contractors. Services provided by these businesses are
not generally taxable.
Business Investment
The category of "business investment" taxable sales includes
farm equipment, feed and seed suppliers, store and office
equipment, computer shops, machine shops, industrial
machinery, hotel and restaurant suppliers, transportation
equipment, manufacturing and refining equipment, industrial
suppliers, paper and packaging materials, medical and optical
supplies, commercial rentals and wholesale dealers.
Transactions reported as subject to the "use" tax are also
included here, regardless of the kind code of the business
reporting the "use" tax.

Figure 6.
Source: Florida EDR.
Figure 7.
Source: Florida EDR.

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