In Summary:
Florida TaxWatch has downgraded Florida's short-term economic outlook, citing the effects of the U.S. conflict with Iran and uncertainty surrounding oil shipments through the Strait of Hormuz. The report forecasts slower tourism growth, rising unemployment through 2028, and weaker GDP growth in the near term. Economists say the outlook could improve if global energy markets stabilize and shipping routes return to normal operations.
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Florida’s short-term economic outlook has taken a “severe shift” due to the U.S. conflict with Iran, according to a new report.
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Florida TaxWatch’s economic forecast released this month showed that while 2026 was already anticipated to see slower growth, the Iran conflict exacerbated already rising unemployment rates.
Florida TaxWatch is a nonpartisan research institute that analyzes state fiscal policy and government accountability issues.
With almost a quarter of all sea-transported oil passing through the Strait of Hormuz, the global supply chain has been severely disrupted, causing ripple effects felt throughout Florida.
The organization tracked a “severe shift” in Florida’s short-term economic outlook, primarily tied to a slowdown in business activity and higher travel and freight costs.
Florida’s latest outlook for tourism and income growth has now dropped, and future expectations remain uncertain.
“Florida is still expected to come back strong from a tumultuous couple of years, although there may be more turbulence than originally anticipated. As the situation gets resolved with time and conditions improve, there will also likely be a course correction with the forecast as well,” wrote Garrett Gouveia, a research economist for Florida TaxWatch.
The state’s unemployment rate is expected to continue rising through 2028 before dropping to around 4.2% through 2035. It was originally expected to plateau in 2027, but that timeline has been pushed back.
Tourism, a critical industry for Florida, was the most affected economic indicator in the report, with growth expectations shrinking by over 45% over the next 10 years. The report anticipates a decade-low growth rate of 0.8% in 2027.
“This was to be expected, as energy costs are a major input to transportation and tourism activities and will eventually be passed on to consumers, limiting what they can do with their budget. Unfortunately, the magnitude is sobering,” said Gouveia.
GDP is also affected, with the state’s GDP growth in 2026 expected to be 2.5%, then decreasing to 1.9% in 2027. However, that number is expected to recover, rebounding to 2.9% the following year.
The shifts in Florida’s economic indicators remain largely tied to energy costs and whether the Strait of Hormuz will resume normal operations in the near future.
“If the Strait of Hormuz is quickly opened, Florida’s forecast will likely correct course to previous ones,” wrote Gouveia. “If not, the national forecasts will likely worsen similar to Florida’s, with more intense unemployment and income growth damage.”
Key Points:
- Florida TaxWatch reported a "severe shift" in Florida's short-term economic outlook linked to the conflict involving Iran.
- Tourism projections were hit hardest, with expected growth over the next decade reduced by more than 45%.
- Florida's unemployment rate is now expected to continue rising through 2028 before gradually declining.
- State GDP growth is projected to slow to 1.9% in 2027, then recover in subsequent years.
- The forecast remains heavily dependent on future conditions in the Strait of Hormuz, a key global oil shipping route.
