Dec. 3, 2019
Despite extended trade negotiations between the U.S. and China and a deceleration in global economic growth, South Carolina’s economy remains resilient, according to University of South Carolina economists at the Darla Moore School of Business. The full forecast, which will be presented at the 39th annual Economic Outlook Conference today, predicts slower growth in 2020 but no recession.
The single best indicator of economic performance – job creation – is expected to slow to 1.5 percent in 2020, according to Doug Woodward and Joseph Von Nessen, economists and directors in the Moore School research division. This stands in contrast to the roughly 2 percent job growth the state has averaged over the previous two years.
“South Carolina has not escaped this trade war unscathed, but our economy remains on solid footing, and we expect to see positive growth in 2020, albeit at a slower pace,” Von Nessen said.
Another factor that has slowed the pace of growth this year has been the waning effects of the Trump administration’s federal tax cut that was passed in late 2017.
“The U.S. economy drank a Red Bull in the form of a tax cut,” Von Nessen said. “And we’re now experiencing a ‘decaffeinated economy’ as the stimulus wears off.”
Steady consumer spending and a strong labor market have been the primary drivers of South Carolina’s economy this year as both the state and the nation face economic headwinds created by uncertainty over international trade policy and weaker global demand. South Carolina’s unemployment rate, which currently sits at 2.6 percent, is a full percentage point below the national average and is at an all-time low.
“With all of the talk this year about economic uncertainty and a possible recession on the horizon, the fact that South Carolinians are likely experiencing the best job market in a generation is often overlooked,” Von Nessen said. “Workers are in high demand right now, and we are seeing strong wage growth as a result. This includes wage growth for workers across the pay scale, with those on the lower end benefitting the most.”
Many of South Carolina’s largest sectors, including wholesale and retail trade, professional services and leisure and hospitality or tourism are primarily supported by steady growth in consumer spending.
On the downside, low unemployment also means it will be more difficult for employers to find workers, and a labor shortage is something that Woodward and Von Nessen believe will limit the state’s growth potential in 2020.
“Even if we were to see a resolution to the current trade disputes, employers are still going to struggle to find the workers they need to satisfy any new demand that emerges,” said Von Nessen. “This has become a major challenge for employers and will continue to be a bottleneck for the state’s growth, but it’s great news for workers who will likely continue to see wage gains as employers are forced to compete for them.”
The economists predict the state’s unemployment rate will maintain its current rate of approximately 2.6 percent throughout 2020.
With an ongoing impeachment inquiry, an upcoming presidential election cycle and global markets in flux, 2020 brings with it considerable uncertainty.
“The probability of a recession is certainly higher today than it was one year ago,” says Von Nessen. “But as long as we have a strong jobs market and consumers continue to spend, we should continue to see positive growth.”
The daylong conference will also feature a national economic outlook from Sarah House, a director and senior economist with Wells Fargo Securities in Charlotte, North Carolina, as well as a special keynote address from new UofSC President Robert “Bob” Caslen.
Despite its success over the past 10 years, South Carolina continues to face a competitive economic landscape. UofSC will play a crucial role in shaping the state’s future, especially considering the availability of a skilled workforce is rapidly becoming the primary driver of economic development in local regions. President Caslen will share his vision and offer a fresh perspective on the role of higher education in advancing the Palmetto State’s economy in the 21st century.
The Dec. 3 conference will be from 11:30 a.m. to 4 p.m. at the UofSC Pastides Alumni Center. The price of attendance is $75. Additional details about the conference including the full agenda and conference speaker bios are available at moore.sc.edu/eoc.