University releases economic forecast for 2010
South Carolinians can expect job and income growth in 2010, according to a presentation Dec. 2 by University of South Carolina economists at the Darla Moore School of Business’ 29th annual Economic Outlook Conference.
Dr. Douglas P. Woodward, an economist in the Moore School’s Division of Research, presented the economic forecast for South Carolina in 2010 to business and government leaders who attended the conference. Woodward did the analysis for the forecast with Dr. Paulo Guimarães, also an economist at the Moore School.
Woodward said that after this year’s painful job losses, the job base in South Carolina is expected to improve slightly, by 0.2 percent, in 2010. Personal income, another broad measure of the state’s economic activity, should reverse course and climb by 3.3 percent next year, up from -1.4 percent in 2009, he said.
However, Woodward said that the jobless rate will remain high even though the recession appears to be ending.
“The projected small rise in job growth will not be high enough to make much of a dent in the state’s historically high unemployment rate,” Woodward said. “We are again entering the Christmas season with great concern about the status of the economy.
“Yet many of our economic indicators suggest that South Carolina’s long recession is now over. Continued growth will depend on moderate energy and fuel costs, a housing rebound, and a steady stock market. Consumers, who have been sharply cutting spending, will have to get back in the market to have a vigorous recovery. It will be important to see how retail sales perform this Christmas.”
It may take more than a year for South Carolina’s double-digit unemployment rate to head back down, Woodward said. In 2010, the state’s unemployment rate should average 11.2 percent. It could drift higher in early 2010 if spending by consumers and businesses remains subdued.
“There is still considerable economic uncertainty,” Woodward said. “Another financial shock and the whole economy could be in trouble again. We could face a relapse. Even so, we diagnose a healthy recovery for early 2010. The positive effects of the federal economic stimulus will be felt through mid-year.”
Housing, office, and retail construction, a major source of growth in the last economic expansion, could start to show signs of life, Woodward said. Single-family housing activity for 2010 should expand, but from a low base.
“Boeing will definitely have an impact in North Charleston, but the state as a whole cannot count on the construction sector contributing many jobs, as it has in past recoveries,” Woodward said.
South Carolina’s manufacturing employment is another problem, with projected declines. It is forecast to fall 11.2 percent at the beginning of 2010 and then taper off to -4.3 by the end of the year, Woodward said.
“Make no mistake: The recession has been agonizing. Yet some South Carolina companies like Sonoco are emerging leaner and meaner and could potentially add to the job base in South Carolina, especially if stronger foreign sales add to an uptick in U.S. demand,” Woodward said. “In general, a depreciating dollar will be good for the state’s exports by making South Carolina products, including manufactured goods, forestry, and agriculture, more competitive internationally. The cheap dollar could also boost the state’s tourism, notably from Canadians who could take advantage of a relatively strong currency and vacation in South Carolina.
“With the falling dollar and higher energy prices going into the economic recovery, there will be upward pressure on consumer price inflation in 2010,” Woodward said. “Moreover, if the economy sputters again, we can expect that Washington again will consider more deficit-financed stimulus spending. The size of the federal budget deficit and its effects on higher prices and interest rates will then become a grave concern.”
The annual conference, sponsored by the Darla Moore school, also featured a keynote address by Harris E. DeLoach Jr., chairman and president of Sonoco Products Company. The direction of the state’s economy also was discussed by a panel of state economists that included Dr. Frank Hefner, College of Charleston; Dr. Don Schunk, Coastal Carolina University; and Bruce Yandle, Clemson University.
2009 Economic Outlook ConferenceForecast 2010: South Carolina Communities at a Glance
- In 2009, employment was down in all metropolitan areas (through October, compared with job activity through October 2008). Myrtle Beach (-3.8 percent) and Sumter (-3.6 percent) posted the largest declines, followed by Greenville (-3.3 percent), Spartanburg (-3.3 percent) and Charleston (-2.6 percent). Columbia (-0.8 percent) and Florence (-0.8 percent) had the smallest loss of employment.
- Retail sales for the first 10 months of 2009 compared with the first 10 months of 2008 were down in all metropolitan areas: Anderson (-14.3 percent), Charleston (-14.9 percent), Columbia (-11.9 percent), Florence (-11.6 percent), Greenville (-15.1 percent), Myrtle Beach (-13.3 percent), Spartanburg (-4.1 percent) and Sumter (-12.3 percent).
- Across most areas of South Carolina, residential construction activity plummeted in 2009. Residential construction (measured by square footage) through October 2009, when compared with activity through October 2008, dropped 57.9 percent in Anderson, 56.9 percent in Myrtle Beach, 37.9 percent in Charleston, 33.7 percent in Florence, 30.8 percent in Greenville and 29.2 percent in Columbia. Spartanburg was flat, with no increase or decrease while activity in Sumter increased 19.5 percent.
- In October 2009, the unemployment rate in all metropolitan areas was much higher than one year ago. It was 13.9 percent in Sumter (up 4 percentage points compared to October 2008), 12.5 percent in Anderson (up 4.7 percentage points), 12.2 percent in Spartanburg (up 4.3 percentage points), 12.1 percent in Florence (up 3.4 percentage points), 10.9 percent in Myrtle Beach (up 2.2 percentage points), 10.4 percent in Greenville (up 3.6 percentage points), 9.7 percent in Charleston (up 3.2 percentage points) and 9.4 percent in Columbia (up 2.5 percentage points).