FDIC: Higher Energy Costs, Slower Housing Market Could Hamper Florida Economy

In its summer state profile, the Federal Deposit Insurance Corporation (FDIC) said that Florida consumers may spend less money the rest of this calendar year as energy costs take up an increasingly larger share of discretionary income.

While consumer confidence remains strong at present, that could be short-lived, some experts believe. Energy costs in Florida are at their highest level in more than 20 years, according to federal government figures released Thursday in a quarterly economic snapshot of the state.

Adjusted for inflation, the FDIC noted that the regular wholesale gasoline price in March was $1.96 a gallon, and said prices had gone much higher in June. Rising gas prices and an active hurricane season may also threaten the state’s tourism industry.

Florida’s economy continues to boom overall, with the third-highest rate of job growth in the U.S. But a slower Florida housing market could have a wide impact on that growth, given the 200,000 jobs generated by the real estate sector from 2001-2005. At 7.8 percent, that period saw the fastest growth in real estate-related jobs than any five-year span since 1981.

But as Florida home loans carry increasing higher rates, and the cost of housing (in South Florida in particular) remains out of reach for many, a slowdown in the market is inevitable. The quarterly report also noted that lower net interest and fee incomes contributed to less profitability with Florida’s community banks. All in all, no doomsday predictions, but stay tuned, as the state’s economic progress could see a little turbulence.