Moore School economists: SC economy austere until mid-2009

COLUMBIA, SC – December 3, 2008 – South Carolinians can expect an austere 2009 as job opportunities decline and the unemployment rate continues to rise, according to a report released Wednesday (Dec. 3) by University of South Carolina economists at the Moore School of Business’ 28th annual Economic Outlook Conference. 

The report, compiled by economists Dr. Paulo Guimarães and Dr. Douglas P. Woodward, foresees the net loss of 22,000 jobs next year and said the unemployment rate in the state will rise to 8.6 percent. Between February and October 2008, the state’s unemployment rate went from a relatively low 5.5 percent to 8 percent, a 25-year high. 

The South Carolina data indicate that the economy is in recession, and it is unlikely that there will be improvement in the economy until at least the middle of 2009, said Guimarães, research professor in the Moore School’s Division of Research. 

During the past year, the construction sector in South Carolina shed 17,700 jobs, Guimarães said, and job losses in this sector are expected to continue in 2009, with a decline of 8.3 percent. Single-family housing permits are expected to be off 35.5 percent next year. This comes on the heels of a similar drop in the number of such permits in 2008. 

Statewide, retail sales are projected to edge up just 0.5 percent in 2009. Meanwhile, South Carolina’s manufacturing employment is expected to retrench, with a projected job decline of 4.4 percent. The forecast predicts an 8.7 percent drop in nondurable-goods manufacturing jobs and a 6.4 percent decline in durable-goods industry employment. Other important sectors, such as government and professional/business services, also will continue to shed jobs next year, putting further pressure on the labor market, the report said. 

Personal income, another broad measure of the state’s economic activity, should climb by 3.3 percent in 2009, down from 4.7 percent in 2008 and 5.4 percent in 2007. 

The ongoing surprises emanating from the financial sector make it difficult to forecast the trends in the real economy, said Woodward. We will not have a recovery until the financial markets clear up and lift this cloud of uncertainty shrouding business conditions. 

Woodward finished off his presentation with a few bright spots that should help put economy on the road to recovery in 2009 and in good position for a rebound in 2010.

– Oil is cheap.  Lower gas prices at the pump are putting more cash in the hands of consumers.   

– Housing is now more affordable and moving back to historical levels above average earnings.

– Stocks are cheap.  If you have the cash, there are some great deals out there.

– The U.S. economy is still consistently ranked as the most competitive in the world.  See the rankings by the World Economic Forum.

As we look towards 2010, Woodward hinted at a few motors that might drive the economic rebound: energy, logistics, healthcare, retirement, agribusiness, the knowledge economy, and exports (which had acted as a stabilizer to the economy for most of 2008).

 

 

South Carolina Communities at a Glance in 2008

►  Job Growth

Only two metropolitan areas posted positive job growth in 2008 (through September, compared with job activity through September 2007): Spartanburg (2.1 percent) and Greenville (0.5 percent). In the rest of the state, employment was down: Anderson (-2 percent), Columbia (-1.3 percent), Myrtle Beach (-1.2 percent) and Charleston (-0.6 percent).  Florence was even, with no increase or decrease.

►  Residential Construction

Across most areas of South Carolina, residential construction activity plummeted again in 2008 after a generally bad year in 2007. Residential construction (measured by square footage) through September 2008, when compared with activity through September 2007, dropped 60 percent in Sumter, 48.4 percent in Anderson, 48.1 percent in Myrtle Beach, 47.1 percent in Florence, 46.2 percent in Charleston, 41.1 percent in Spartanburg, 34.1 percent in Columbia and 26.1 percent in Greenville.

►  Retail Sales

Areas posting the best retail sales growth in 2008 (through September): Anderson (9.5 percent), Florence (8.4 percent) and Greenville (5 percent). Retail sales in Columbia grew by 2.3 percent and in Charleston by 1.8 percent, but retail sales were down in Sumter (- 3.8 percent) and Myrtle Beach (-3.5 percent).

►  Unemployment

The unemployment rate in September 2008 was 8.8 percent in Sumter (up 1.5 percent compared to September 2007), 8.1 percent in Florence (up 1.7 percent), 7.3 percent in    Spartanburg (up 1.3 percent), 7.1 percent in Anderson (up 1 percent), 6.9 percent in Myrtle Beach (up 2 percent), 6.4 percent in Columbia (up 1 percent), 6.3 percent in Greenville (up 0.9 percent) and 6.1 percent in Charleston (up 1.3 percent).

 

A copy of the report will be available online at http://mooreschool.sc.edu/moore/research.