TRENDS IN FLORIDAS TAXABLE SALES

BY REGION
August 2016

Executive Summary
New data on taxable sales (an indicator of aggregate spending)
along with other economic indicators such as employment and
population growth point to continued economic expansion in
Florida for the remainder of 2016. This issue features an analysis
of the major Floridas regions performance by breaking down
the components of the States taxable sales.
The regions examined in this analysis are Miami, OrlandoKissimmee, Tampa/St. Petersburg, Ft. Lauderdale, West Palm
Beach and Jacksonville. In 2015, the main contributor to total
Florida taxable sales was the Orlando-Kissimmee Region, with
15.4 percent of total. The Region was also dominant in the
Tourism and Recreation category and in Total Investment, due
to its wide array of world-known theme parks, which require
periodic upgrading and expansion. The Tampa region was the
leader in Total Retail Taxable Sales, and has overtaken Miami as
the top contributor to retail sales in the state.
However, Miami remains a state leader in business investment,
with a growth rate exceeding the statewide average. Jacksonville
also outperformed the statewide average in retail sales growth,
but the primary economic drivers for the state continue to be
the Orlando, Miami, and Tampa regions, which contribute 40
percent of all the taxable sales in the state.

Overview of Employment and Population

Trends in Florida

Figure 1.
Source: Federal Reserve Economic Data (FRED)

The most recent data available from the Florida Department of

Economic Opportunity (DEO) also indicate a low unemployment
rate of 4.7 percent for June 2016, below the national average of
4.9 percent. Figure 2 shows the official unemployment rate (U3) and the rate of unemployment and underemployment
combined (U-6) for the state of Florida provided by the U.S.
Bureau of Labor Statistics (BLS).
Both unemployment and underemployment peaked in 2010
during the Great Recession and have been on a steady
downward trend since then.

Increasing employment is an important factor driving the

growth of taxable sales in Florida. According to the Federal
Reserve Economic Data (FRED) database maintained by the
Federal Reserve Bank of St. Louis, Floridas employment growth
rate as measured through annual percentage changes has
averaged 3.3 percent from January 2014 through June 2016.
This far exceeds the national average of 2 percent during this
same period.
In terms of long term trends, Floridas annual job growth rate
has been positive for the past 71 months (5.9 years), and greater
than or equal to 3 percent for the past 27 months (2.3 years).
Florida has especially strong private-sector job growth
averaging 3.2 percent in June 2016, which is 1.3 percentage
points higher than the national average. (See Figure 1.)

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*2nd quarter 2015 through 1st quarter 2016

Figure 2.
Source: U.S. Bureau of Labor Statistics (BLS)

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Business Barometer for Florida,

August 2016

BLS data indicates that during the first 6 months of 2016, Florida
added 113,000 non-farm jobs, and current overall employment
is currently among the highest in the states history. The largest
percentage of job growth was in the Professional and Business
Services industry, a positive indicator for investment-related
taxable sales. According to Florida TaxWatch, Florida is ranked
third among states with the fastest job growth, and is thus one
of the leading states in terms of job creation. According to the
University of Central Florida (UCF) Institute for Economic
Competitiveness, total employment in Florida is expected to
increase at an average of 1.8 percent per year between 2016
and 2019. Nationwide employment is expected to increase at a
slower rate of 1.0 percent per year during this same period.
The Florida population is also increasing at a rate exceeding the
national average, a positive indicator for taxable sales growth in
the state. In terms of relative population growth, Floridas
growth has exceeded the national average since 2011, and is
projected to continue that trend over the next several years.
According to UCF, the average Florida population growth rate
from 2011 through 2015 was 1.5 percent, almost double the
national average of 0.8 percent provided by the U.S. Census. A
statewide Florida average of 1.6 percent population growth is
projected for 2016 through 2019.

taxable sales and to analyze the Regions performance in the first

half of 2016.
According to the EDR, the sales tax is levied on sales of goods,
but not services, although there are some taxable services.
Major categories of exempt sales are food not prepared for
immediate consumption, medical and legal services and
residential utilities, items purchased for resale, intangible
personal property and rentals over six months.
The EDR estimates that taxable sales comprise 40-45 percent of
all retail sales. A service- oriented economy, based on financial
activities and professional services, would actually be larger than
what the total taxable sales and trends suggest. Although these
figures are not indicative of the size of the economy, particularly
because they leave out important segments of the service
sector, they still constitute a proxy that can be used to gauge
economic activity on a regular basis, and allow comparisons
between the regions.

Main Contributors of Taxable Sales in Florida

In 2015, Florida collected about $389 billion in taxable sales,
according to the Florida Office of Economic and Demographic
Research (EDR), which provides detailed data on statewide
taxable sales. The main contributor was Consumer Non-Durable
sales representing 31 percent of total, followed by Tourism and
Recreation with $88 billion or 23 percent of total. Business
investment represents 17 percent, autos and accessories 16
percent, Consumer Durables 7 percent and Construction
Investment 6 percent. Therefore, investment (business and
construction) composes 23 percent and consumer spending 77
percent of the total. These percentage distributions are very
comparable to the distribution of taxable sales that has been
observed in the first half of 2016.

*Projections.
Figure 3.
Sources: UCF and 2010 U.S. Census.

Spotlight on Floridas Regions

The Washington Economics Group, Inc. (WEG) analyzed Floridas
performance by regions, based on taxable sales, as reported by
the Florida Office of Economics and Demographic Research
(EDR). The year 2015 will be used as a benchmark to illustrate
the relative size of the main regions contributions to Floridas

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Figure 4.
Source: Florida Office of Economic and Demographic Research (EDR)

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Business Barometer for Florida,

August 2016

WEG analyzed the taxable sales trends in Florida by region for

the first half of 2016. By regions, the main contributor to total
Florida taxable sales was Orlando-Kissimmee with 15.2 percent.
This is followed by Miami at 12.7 percent, Tampa at 12.1
percent, Ft. Lauderdale at 9.1 percent, West Palm Beach at 6.9
percent and Jacksonville 5.9 percent as presented in Table 2
below. Orlando is a particularly important contributor in the
category of tourism and recreation taxable sales. Orlando
contributed $9.7 billion in taxable sales through tourism and
recreation in the first half of 2016, which is over 24 percent of
the statewide total of $40.2 billion. It is important to note that
Orlando, Miami and Tampa are the largest regions in Florida in
terms of population and economic activity.

Investment-Related Taxable Sales

An important component of total taxable sales is investmentrelated taxable sales, which includes business investment as well
as construction. Figure 6 below that the ratio of investmentrelated taxable sales to Floridas total taxable sales averaged 24
percent between 2006 and 2015. It reached a peak of 27.6
percent (housing bubble) in 2006 before falling below average
as a result of the Great Recession that ensued. The investment
to total taxable sales ratio has been increasing modestly over the
last several years, growing from a low of 22.9 percent in 2012 to
23 percent in 2015. However, it is still below the pre-recession
average.

Table 1. Total Taxable Sales First Half of 2016

($ Million)
Florida, of which,
Orlando
Miami
Tampa
Ft. Lauderdale
West Palm Beach
Jacksonville

%
Out of Total

169,674
25,742
21,512
20,612
15,444
11,713
10,023

15.2%
12.7%
12.1%
9.1%
6.9%
5.9%

Source: Florida Office of Economic and Demographic Research (EDR)

Total taxable sales for Florida as a whole grew by 4.6 percent

($7.5 billion) in the first half of 2016 when compared to the same
time period in 2015. In terms of long-term trends, total taxable
sales in Florida has been steadily growing over the last two years.
This steady growth is expected to continue, coinciding with
statewide population and employment growth that is projected
to outpace the national average, along with the growing number
of tourists in important commercial centers such as Orlando and
Miami. These trends are displayed on Figure 5 below.

Figure 6.
Source: Florida Office of Economic and Demographic Research (EDR)

Miami contributed over $4.9 billion in investment-related

taxable sales in the first half of 2016, equivalent to 12.4 percent
of total. Orlando also contributed nearly the same amount,
followed closely by Tampa with $4.7 billion (11.8 percent).
However, Tampa is the leader in investment-related taxable
sales in construction with over $1.2 billion in construction
investment in the first half of 2016, which represents 12.7
percent of the state total. Orlando contributes 12.0 percent
($1.2 billion) and Miami contributes 8.9 percent ($870 million).
Table 3. Total Investment-Related Taxable Sales-First Half of 2016
%
($ Million)
Out of Total
Florida, of which,
39,462
Orlando
4,906
12.4%
Miami
4,876
12.4%
Tampa
4,665
11.8%
Ft. Lauderdale
3,590
9.1%
West Palm Beach
2,841
7.2%
Jacksonville
2,352
6.0%

Figure 5.
Source: Florida Office of Economic and Demographic Research (EDR)

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Source: Florida Office of Economic and Demographic Research (EDR)

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Business Barometer for Florida,

August 2016

2016 Investment-Related Taxable Sales Trends

Retail Taxable Sales

The taxable sales composed of construction and business

investment rose by 8.8 percent in the first half of 2016 in Florida.
Orlando was the leader with a strong 9.3 percent growth. Miami
was in second place with growth of 9.1 percent, slightly above
that of the State. The other important regions in Florida
experienced more moderate expansions between 5.3 percent in
Jacksonville and 7.4 percent in West Palm Beach.

Total taxable sales related to retail, which includes durable and

non-durable consumer goods as well as automobiles, is an
important indicator of the overall health of the Florida retail
market. The Tampa region contributed most to retail sales in the
first half of 2016 with $11.6 billion, or 12.9 percent of the total
taxable retail sales in Florida of $90.0 billion. Miami and Orlando
both contributed around the same amount with $11.2 billion and
$11.1 billion respectively. These are areas with large populations
and visitors that generate a sizable amount of spending in
consumer durables and non-durables.
Table 4. Total Retail Taxable Sales-First Half of 2016
%
($ Million)
Out of Total
Florida, of which,
89,997
Tampa
11,585
12.9%
Miami
11,159
12.4%
Orlando
11,115
12.4%
Ft. Lauderdale
8,714
9.7%
West Palm Beach
6,309
7.0%
Jacksonville
5,582
6.2%

Figure 7.
Source: Florida Office of Economic and Demographic Research (EDR)

Source: Florida Office of Economic and Demographic Research (EDR)

2016 Retail Activity Trends

Investment is the long-term engine of the economic expansion
in Florida. EDR data indicates a positive long-term growth trend
over the last two years with strong growth of 8.4 percent in 2014
and 7.4 percent in 2015. For the first half of 2016, investmentrelated taxable sales expanded by 8.8 percent compared to the
same period in 2015. This development is positive for the
sustainability of Florida business investment after the Great
Recession.

The Index of Retail Activity aggregates spending on consumer

durables and non-durables plus Tourism & Recreation and is
analogous to consumer spending. Thus, it is a broad-based
indicator. Growth in the first half of 2016 for the State of Florida was
a moderate 4.1 percent, compared to same period in the previous
year. Tampa displayed the fastest rate of growth of all major regions
in consumer spending with an increase of 6.2 percent. Jacksonville
expanded at rates above the statewide average, however, all of the
southeast metro areas as well as Orlando are experiencing retail
growth at a rate slower than the statewide average.

Figure 8.
Source: Florida Office of Economic and Demographic Research (EDR)
Figure 9.
Source: Florida Office of Economic and Demographic Research (EDR)

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Business Barometer for Florida,

August 2016

Growth of the Florida Index of Retail Activity, a broad measure

of consumer spending, averaged 7.5 percent in both 2014 and
2015. However, there is a broad trend of declining growth rates
in Florida retail sales since Q1 2015. This coincides with the
declining growth rates for retail in South Florida metro areas.
Within the last two years, the growth rate of retail sales reached
a high of 9.2 percent in March 2015 and a low of 3.1 percent in
May 2016.

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.

Figure 10.
Source: Florida Office of Economic and Demographic Research (EDR)

Conclusion

Business Investment

The overall trend for taxable sales growth in Florida is positive,

as is to be expected given positive macroeconomic indicators for
population and employment growth in the state. The Orlando
and Miami metro areas continue to be the principle drivers of
taxable sales growth in Florida with Orlando being particularly
strong in tourism, although their growth has yet to reach the prerecession average. Investment-related taxable sales growth
remains relatively strong in Orlando and Miami, however the
Tampa and Jacksonville metro areas in particular are
experiencing strong growth in retail sales. Although overall retail
sales growth in the state has been declining since Q1 2015, it
continues to average above 4 percent for the first half of 2016.

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.

The Washington Economics Group, Inc. (WEG), founded in 1993, is a boutique economics consulting firm based in Coral Gables.
WEG provides exclusive economics and business consulting services, specializing in the Florida, U.S. and Latin American
economies.

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