Business in Florida

The US is a vast a diverse place with 50 states, while it may be diverse geographically, politically and racially. It is also diverse economically, with certain states specializing in different areas. The subprime-mortgage crises hit most states fairly hard, but the pain was unevenly distributed across many states, with some states getting the bulk of foreclosures and bankruptcies. Studies have show that American businesses are likely to look domestically first for business opportunities before venturing abroad into international waters where regulations, culture, and economies are less familiar. Even when foreign businesses are looking to invest in the US, they tend to look at individual states for investment as opposed to the entire country. This is simply because different states might have differences in regulations, because even if it is called the United States, for most companies it is 50 different markets. While these markets may be highly similar to one another, they have their differences none the less. For example, a coat manufacturer surely stands to do better in states like New York and Alaska, as opposed to Arizona and Texas. This is why in addition to our economic outlooks on countries we have decided to also do a similar series on individual states.

Florida is the 4th largest economy in the US, with a GDP of $750 billion it would be the 17th largest economy on the planet if it were an independent country. Most of Florida’s economy is driven by tourism and senior citizens. There is a huge retiree population in Florida, making the state conducive to medical companies and other companies specializing in elderly care. The states population is heavily urbanized, and most of the economy is concentrated in the metropolitan areas.

The state of Florida imposes no personal income tax and has no state mandated minimum wage, as a result businesses have to follow the Federal minimum wage requirements which in 2010 is $7.25.  The Florida economy was hit hard by the 2008 financial crises, with nearly 300,000 homes left vacant in Florida due to mortgage defaults by homeowners. Homeowners in Florida also have to pay higher deductibles on home insurance due to a climate that is conducive to hurricanes. Tourism accounts of the biggest chunk of Florida’s economy, with Florida being the top destination state in 2011.  Nearly  24 million tourists visited Florida beaches in 2000, spending approximately $22 billion in the local economy. South Florida accounts for a large chunk of the arrivals due to its sunny beaches, and amusement parks. The second largest industry in Florida is agriculture, with Citrus fruit, especially oranges, being a major part of the economy. In 2009, fishing was a $6 billion industry, employing 60,000 jobs for sports and commercial purposes. Phosphate mining, concentrated in the Bone Valley, is the state’s third-largest industry. In terms of industry, Florida produces about 75% of the phosphate required by farmers in the United States and 25% of the world supply. Another major economic engine in Florida is the United States Military. There are currently 24 military bases in the state, housing three command centers  with nearly 110,000 U.S. military personnel currently stationed in Florida,contributing, directly and indirectly, $52 billion a year to the state’s economy. Florida also has a huge aerospace industry that contributed greatly to the military as well as NASA’s Cape Canveral. But after NASA closed the shuttle launching facility in Florida, there was huge loss of jobs and it dealt a blow to the local aerospace industry.

Businesses most likely to thrive in Florida would have to be businesses related to tourism due to the large base for tourism in the economy. But Florida also boasts a strong education system, as a result technological companies could also take advantage of the glut of technological talent in Florida. With the closing of the NASA facility, there would be a large number of engineering professionals looking for work. With the current depressed housing market in Florida, construction related companies would likely have a hard time getting more business. In terms of consumer spending, Florida relies on large part on retirees and young professionals to drive the economy, and retirees have managed to get through the crises with less damage then the other segments of the population. So spending from that consumer group should remain stable, but young professionals suffered a disproportionate amount of job losses as a result that consumer group will likely be a weak source of spending. So in terms of selling into Florida, that might be a mixed bag for businesses. Overall the investment climate in Florida is neutral, with financial crises having taken its toll and likely to re-emerge only once the rest of the country picks up due to the fact that a large portion of the economy is based on tourism. If you have any questions feel free to email me at and feel free to follow me on my Globial account.

Jay Zadey  

Wikipedia: Florida


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