Domestic capacity is down but fuel prices are half what they were six months ago and there's talk of recession, so will we see domestic prices drop?

I'm looking into NYC-->Florida fares over Christmas, and they're more expensive than previous Christmas fares, but I can't decide to purchase now or wait.

Fares go up and down for different reasons.

Fares on an already-partly-booked flight go up because lower-priced fare buckets sell out, and all you see left are the higher-priced fare buckets that were always there (but were typically hidden from you on most websites which only show the lowest available fare at any given moment). You need to use a tool that tells you flight availability by bucket (and understand the whole bucket system) to have a good idea if a fare on a flight is about to go up, because it all has to do with the bucket with the current lowest fare selling out.

Fares typically go down when airflines insert new buckets with sale fares, or adjust fares on existing buckets (that have no yet sold out). But they're least likely to do such fare sales over Christmas in any year, since that's the one time of year they're likely to fill up the planes at any cost. That's not to say it's completely impossible, but you're much more likely to see sales that black out the last two weeks of December and the first few days of January than sales that include the whole Christmas period.

Fares are extremely turbulent. I just hope the silly surcharges go away.

I'm hoping for lower fares next year.

Unfortunately, I think it's pretty unlikely that you're going to be seeing fares drop for the Christmas period. This is mainly b/c the booking curve has shifted out compared to previous years as people locked in flights earlier than they might have ordinarily due to the rising fare environment. As a result, airlines sold out the lower fare classes earlier than in previous years, and can now afford to charge a premium for the seats that are left. For a popular route like NYC-Florida, I don't think the airlines anticipate having trouble filing the seats that are left around Christmas (especially in light of the capacity reductions), so if it was me I'd bite the bullet now. In fact, I booked my PDX-SRQ flight for xmas three months ago and I am VERY happy I did. Best of luck finding something reasonably priced!