UofSC economic forecast for 2021: Palmetto State’s economy largely rebounded, but significant gaps still remain
Posted on: November 25, 2020; Updated on: November 25, 2020
With a current unemployment rate of 4.2 percent — less than two percentage points away from its pre-pandemic low of 2.5 percent — South Carolina’s economy has largely recovered from the pandemic-induced recession of 2020.
- The strong statewide recovery was highlighted by University of South Carolina economists Douglas Woodward and Joseph Von Nessen during the 40th Annual Economic Outlook Series presented by the Darla Moore School of Business on Monday (Nov. 30).
What they’re saying: “It’s a tale of two recoveries. South Carolina’s economy has come back strong and is almost fully recovered in many areas,” Von Nessen says. “But there are two major exceptions – the leisure and hospitality industry and small businesses providing in-person services.
- The economists cautioned that a COVID-19 vaccine will be required to return to full strength across all sectors in 2021.
- Leisure and hospitality sector employment levels are still down 17 percent compared with pre-pandemic levels and remain at risk for additional declines in the short run.
- Employment across all other sectors in South Carolina, by contrast, is down by just 2 percent.
Between the lines: “Until individuals are more comfortable traveling, staying in hotels, and spending time at restaurants, bars, and other recreational facilities, this dichotomy will persist,” Von Nessen says. “A vaccine is still our best bet to restore consumer confidence.”
- More than 130,000 South Carolinians — many of whom had worked in the service industry — are still unemployed and receiving benefits through the CARES Act.
- These workers could be cut off when federal support programs expire on Dec. 31, which is before most health officials believe a vaccine will be widely distributed.
What’s next: With a projected uptick in COVID-19 cases likely over the upcoming holiday season accompanying the expiration of CARES act funding, it is unlikely that the pace of South Carolina’s economic recovery will improve before next year.
- Among the long-term changes the pandemic is likely to bring to South Carolina’s economy is the shift toward remote work, which is incentivizing workers in densely populated urban areas to consider relocating to regions with a relatively lower cost-of-living and affordable, larger homes. South Carolina has seen a significant increase in people moving from other states.
- “This will be an advantage for businesses as the economy recovers in 2021 and 2022,” says Woodward, director of the Moore School’s Division of Research. “The increase in population growth across the Southeast means a greater demand for goods and services across this dynamic region of the country.”
- Another key factor to South Carolina’s long-run economic growth will be its continued success in export-oriented manufacturing.
- This recovery is unique because it is being led by biological factors — the pandemic and the development of a vaccine — more than economic factors, Von Nessen says. “We’ve made good progress so far, but we’re not out of the woods yet.”
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