USC & Higher Education
USC Economists Predict Strong Year for S.C.
South Carolina has rebounded from the recession and can look forward to a year of more jobs and personal income, according to University of South Carolina economists Doug Woodward and Joseph Von Nessen, who released their report on the state’s economic health Monday at the university’s 33rd annual Economic Outlook Conference.
Von Nessen said South Carolina isn’t just doing well compared to other states; it’s outstripping its own past performance, particularly in the area of jobs.
“Our rate of employment growth is increasing faster today than it was before the recession began,” he said.
The state’s unemployment rate has dropped from 8.8 percent a year ago to the current level of 7.5 percent, and is expected to get as low as 6.8 percent by this time next year.
Ten counties, generally representing major metropolitan areas, have “achieved total employment levels beyond the maximum they achieved before the recession began,” Von Nessen said.
Six other counties are primed to do the same, and every county saw employment growth over the year.
“We can begin to think of South Carolina as moving beyond recovery and into expansion,” he said.
Von Nessen pointed to major gains in housing sales and construction in Charleston, Greenville and Columbia, as well as employment growth in leisure and retail trade, especially in Myrtle Beach.
“It means there’s consumer demand, that consumers are more confident, they’re spending money, and this means one of two things — either they have more money to spend than they did this time last year, or they have the same amount of money to spend, but they’re more willing to spend it,” says Von Nessen.
The news isn’t all great, as wage growth remains stagnant. New jobs are only adding to the state’s average wage rather than improving it, and there are too many people working part-time jobs because they can’t find full-time employment. In fact, that describes about 90 percent of the people in part-time jobs.
That figure “remained high and hasn’t seen any appreciable decline, so that’s a problem,” Von Nessen said.
Also, the recovery hasn’t yet reached rural counties that are still suffering from the loss of industries that went offshore decades ago.
“Rural areas, that’s been a persistent problem in South Carolina,” Woodward said, “where we’ve had double-digit unemployment rates even in the best of times. That’s probably our greatest economic long-term development challenge from a regional point of view.”
The hang-up there is that manufacturers are looking for solid infrastructure and a qualified labor force.
“That can be challenging in some of these areas,” says Woodward. “Many of these places did have an industrial base before — Marion’s a good example of that — but I think we’re starting to see over this last year some areas peripheral to the major metropolitan areas getting a new plant announcement. It’s been tough for them, especially those that were previously dependent on textiles and apparel, but this is a long-term challenge, not something that we can even measure year to year.”
While bedrock South Carolina economic sectors like manufacturing and tourism are bouncing back, is there any chance the state could become a home to newer industries?
“There are two aspects to that,” Von Nessen said. “First of all is the knowledge economy. Engineering is the textbook example of a knowledge economy job, meaning high-skill labor that goes out, develops new ideas, innovates and commercializes them. The knowledge economy is coming along in Charleston, and that’s one reason Charleston has been so highly ranked nationally.”
Other economic speakers at Monday’s conference suggested that South Carolina’s performance is indicative of a national economic recovery.
“I think in 2014 it’s likely, judging from consumer spending, that the economy will continue to post rates of growth similar to those over the past several years,” said Raymond Owens, Senior Economist with the Federal Reserve Bank of Richmond. “If there’s a change, I think it’s tilted a bit more toward the up side than the down side.”
The state’s economic fortunes for 2014 could be affected by changes in monetary policy, as soon-to-be-leaving Federal Reserve chairman Ben Bernanke suggested last May the government might be reducing the size of its bond-buying program, which was intended to stimulate the economy.
Although Bernanke’s announcement sent shockwaves through financial markets, Cullen Roche of Orcam Financial said it is actually another indicator of economic stability.
“I think that the Fed actually stepping out is a sign that the economy no longer needs this artificial government stimulus in a lot of ways, that this is a much more organic and self-sustaining recovery than we’ve see in the last few years,” Roche said.