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Politics

Foreign Tourism Slowdown Could Add to Florida's Economic Woes

July 22, 2012 - 6:00pm

The fragile economic footing of the European Union will continue to weigh heavily on Floridas potential to generate revenue -- and so will the sluggish state of new home sales and construction.

Just as important may be fuel prices and the strength of the U.S. dollar, state economists said as they piece together a financial forecast for the Sunshine State.

The high pump prices that marked the end of 2011 and the start of 2012 may have cut into the states revenue, as fewer people had disposable income to drive to Floridas beaches and amusement parks, said Clyde Diao, an economist from the governors office.

Weve experienced successive declines in the last two quarters with fewer tourist visitors and thats probably because of the high gas prices, Diao said.

The economists continue to fine-tune the forecasts for when they expect any turnarounds to occur.

The state already expects the modest growth in the economy to slow in coming years as the European crisis escalates along the Mediterranean, while Floridas construction industry is expected to take longer than other regions of the U.S. to recover. Unemployment may fall from its current 8.6 percent to around 6 percent in 2014.

Part of what is going to drive our (economy) is more folks moving into the state from other states, said Amy Baker, Florida chief economist.

A reversal was seen in domestic travel the past couple of months as gas prices dropped nearly 60 cents a gallon from the start of the year. The respite gave people their first chance in six months to get away from their homes, Diao said.

But after the recent two-month decline in fuel prices, gas station prices are again climbing, meaning Florida could be heading down some rough revenue generating roads as it rolls into the 2013 legislative session.

Prices have grown 10 cents in the past week in Florida, starting the week at $3.40 a gallon, according to AAA.

A BP station in Gainesville was selling a gallon of regular for $3.60 on Sunday.

The auto club points to the rising tensions in the Mideast, along with a decline in oil supplies and gasoline inventories, for jacking up the price among speculators.

"Motorists will likely see gas prices increase throughout the month as tensions with Iran continue to create concern of a disruption in global oil supply, Jessica Brady, AAA spokeswoman, stated in a release on Sunday night.

Although the national average climbed 14 cents since July 1, prices are still about 50 cents less than the peak price of $3.94 in April.

A barrel of oil started the week at $91.44 on the New York Mercantile Exchange, a $4.34 increase in one week.

Added to Floridas economic outlook woes may actually be the strengthening of the U.S. dollar against international currencies, which could hinder the number of Canadian and European visitors.

Tourism from Canada dropped 11.4 percent in the first quarter of 2012, after a modest growth at the end of 2011.

Reach Jim Turner at jturner@sunshinestatenews.com or at (772) 215-9889.

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