University of South Carolina releases economic forecast for 2025

The University of South Carolina Darla Moore School of Business, in partnership with the South Carolina Chamber of Commerce, released the 2025 economic forecast at the 44th annual Economic Outlook Conference. The Palmetto State is likely to see steady growth in 2025 despite an increased risk for inflation.

South Carolina’s economy is expected to expand in 2025 with steady growth projected across most industries, even as inflationary pressures remain a concern, according to Moore School economists Douglas Woodward, Ph.D., and Joseph Von Nessen, Ph.D. The outlook presented today highlighted how the state’s economy has readjusted to more sustainable growth patterns following the deflation of the stimulus-based pandemic bubble.

“If we had to give it a grade, we would grade South Carolina’s current economic performance at a B+ level,” said Von Nessen, research economist in the Moore School’s Division of Research. “There’s no question that consumer sentiment remains low because of high prices and the lingering effects of inflation. But consumers are continuing to spend, all major sectors are seeing positive employment gains, we have historically low unemployment in South Carolina, and wage growth is once again outpacing inflation — meaning that consumers are beginning to claw back some of their lost purchasing power.”

Looking ahead to the new year, Woodward and Von Nessen project that if wage growth continues to outpace inflation, consumers will likely recapture their lost purchasing power in 2025. This makes it more likely that consumer spending — the single biggest driver of economic growth — will continue unabated.

“This economy is still in recovery mode, even though most economists don’t use that term very often these days,” Von Nessen said. “But the reality is that to have a full recovery from the 2020 recession, South Carolina must recover all of its lost jobs and all of its lost purchasing power. It’s this second piece that we haven’t seen yet. This is why many South Carolinians continue to feel so frustrated and often don’t believe it when they hear that the economy is doing well overall.”

Another part of South Carolina’s readjustment to a more sustainable growth pattern is the cooling of the labor market. For example, South Carolina’s unemployment rate has increased to its current level of 4.7 percent from 3.0 percent in January 2024. While this is a dramatic increase, the average unemployment rate in South Carolina across all previous economic expansions was 6.0 percent, meaning that the labor market is still in a strong position.

According to Woodward and Von Nessen, the biggest threat that South Carolina’s economy faces in 2025 is the possibility of a rebounding inflation. Despite the fact that the U.S. inflation rate has been slowly falling towards the Federal Reserve’s target of 2.0 percent, there are still significant price pressures that could blunt this momentum.

This threat of higher inflation could be further exacerbated by new tariffs being proposed for the Trump administration. Nevertheless, the economists also stressed that tariffs could, under the right circumstances, generate long-run benefits for South Carolina.