Walt Disney World of New Orleans? EPCOT of St. Louis? Were it not for a self-piloted scouting mission over 27,000 acres in Orange and Osceola counties, Walt Disney’s “Florida Project” might not have landed in Florida. Prior to Disney’s dummy companies buying up land in the mid-1960s, the entertainment pioneer was eying the Big Easy as a possible location. As the story goes, Disney considered the North Shore of the New Orleans metro area but changed his mind after experiencing the greed of Louisiana politics. In the Gateway City, Disney imagined EPCOT (Experimental Prototype Community of Tomorrow) as a gentrification project. According to University of Central Florida historian Dr. James Clark, “What they were talking about was a downtown restoration, and the Disney effort would be indoors in a couple of downtown buildings. Walt quickly realized that it was not his vision, which was to build a city of tomorrow, not an amusement park.”
Luckily for Floridians, after that reconnaissance flight over Central Florida, Walt Disney conceived and constructed his dream in the Sunshine State. According to a 2023 study by Oxford Economics, the Walt Disney World Resort produced $40 billion in economic impact across the state of Florida in fiscal year 2022. The study also noted that Disney generated 263,000 direct and indirect jobs in the state, or 1 out of every 32 jobs in Florida, including Disney’s 82,000 statewide workforce. Per the study, without Disney, Florida’s unemployment rate would jump from 3% (at the time) to nearly 5.5%.
The history is there, and the company has planted deep roots over the decades. It shouldn’t surprise that Disney’s stock price (purple line) essentially beats at the same pulse rate as that of Florida’s household sector as gauged by the Conference Board’s measure of Florida consumer confidence (orange line). While monthly volatility was a given during the 2010s expansion, it’s notable that DIS’s interim pullbacks around the 2011 euro crisis and the 2015-16 industrial recession were “felt,” as reflected as sympathetic moves in local consumer sentiment. Equally telling, while post-COVID gyrations we’re significant, when anchored to December 2019, you see that both series today are roughly 20% below pre-pandemic levels.
The economic importance of Florida tourism cannot be overstated. It follows that a link from travel to the state’s labor cycle should be observable. High-frequency data make a convincing case. In the last three years, year-over-year (YoY) trends between Florida’s initial jobless claims and Orlando’s hotel occupancy have moved in tandem. As post-pandemic travel took flight in 2022, relatively smaller YoY declines in initial claims (yellow line) and occupancy (red line) drew parallel paths. More recent performance this year has been uneven for hotel demand and gains in initial claims have become more commonplace.
To be sure, Mother Nature renders Florida susceptible to macroeconomic distortions. Initial claims can attest to that. In previous years when hurricanes made landfall, spikes in filings created undo noise that eventually corrected to the downside. This year is no different with Helene and Milton creating a sizable upward deviation in October before the normalization evident in November. For what it’s worth, Florida continuing claims (not illustrated) have not exhibited the same higher tilt as initial claims. In fact, after a few blips above the zero line in October, continuing claims have resumed declining YoY.
To be sure, continuing claims are a subset of the total unemployed across the state; they measure those out of work and receiving unemployment insurance benefits. According to the Bureau of Labor Statistics, Florida’s 36,874 October average for continuing claims only accounts for about one-tenth of the state’s total unemployed of 369,239. A holistic picture of the jobless picture would be incomplete if continuing claims were the only figure incorporated.
To that end, the level of Florida unemployment is in synch with the nation. Through October, it stands 23.0% above the low reached over the last few years; the comparable measure for the U.S. came in at 22.6%. While the Florida unrounded unemployment rate has reached lower lows vis-à-vis the U.S. in the current cycle – 2.744% versus 3.429% – we see no coincidence that both bottomed in the same month of the same year, April 2023. Moreover, Florida’s October rate of 3.348% has continued to grind higher, suggesting the current cycle of rising unemployment is not complete.
Florida is no manufacturing hub – its factory sector accounts for about 4% of the state’s total nonfarm payrolls, half the national average. A better gauge, the private non-manufacturing sector, registered a -37,000 decline in October (light blue line). Though a cyclical red flag on the surface, half the drop was in Leisure and Hospitality nodding to temporary storm effects.
Florida aside, after advancing 151,000 in September and 139,000 in August, October private non-manufacturing payrolls in the other 49 states plus the District of Columbia posted a paltry 5,000 gain. July, however, saw a -5,000 contraction. Steady three-digit gains averaging about 180,000 in 2024’s first half have given way to a bumpier path. November and December will be testing grounds given single-digit gains or declines fell in two in the four months ended October. First occurrences in past cycles – May 1990, April 2001 and April 2008 – surrendered to recession when the streak crossed over to three in four months, a fate avoided in the 2015-16 industrial recession and in 2020. No doubt, Disney is banking on a happiest-place-on-Earth outcome.