Iran conflict dims Florida growth outlook

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 moving through the Strait of Hormuz, the global supply chain has been severely disrupted causing ripple effects that have been felt throughout Florida.

The organization tracked a “severe shift” in Florida’s short-term economic outlook tied primarily to a slowdown in business activity and higher costs for traveling and transporting goods.

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 to go up 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 impacted economic indicator in the report, with tourism growth expectations shrinking by over 45% during the next ten 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 over to consumers, limiting what they can do with their budget. Unfortunately, the magnitude is sobering,” said Gouveia.

GDP is also impacted, with the state’s GDP growth in 2026 expected to be 2.5% before 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.”