South Carolinians can expect slower growth in both jobs and personal income in 2008, although the state probably will avoid a recession next year, Moore School economists told more than 200 business executives, government representatives, and community leaders Dec. 3 at the school's 27th annual Economic Outlook Conference in Columbia.

Dr. Doug Woodward speaks

The most worrisome trend is the continued decline in home sales, construction, and values. These have "ripple effects that could trip us into recession," Woodward said. Yet the picture is mixed, because the state is continuing to increase jobs, though at a slower pace, according to the U.S. Bureau of Labor Statistics.

Dr. Paulo Guimarães

Statewide, Guimarães said, retail sales are projected to grow 3.1 percent, just slightly above the inflation rate. Construction, a major source of growth for most of this decade, will continue to spiral downward. Single-family housing permit activity for 2008 should be off 11.4 percent in the state, following a 24.7 percent decline in 2007.

Employment in the state, which grew about 1.9 percent in 2006, will grow 1.4 percent in 2007 and 1.1 percent in 2008. Most of the jobs South Carolina is likely to gain next year will come from restaurants, hotels, nursing homes, clinics, and hospitals, Guimaraes said. But South Carolina’s manufacturing employment is expected to continue to crumble, with projected job losses in this sector for 2008 reaching 4.2 percent. The forecast predicted a 6.9 percent decline in nondurable goods manufacturing, such as textiles and apparel, and a 1.9 percent fall in durable goods industry employment.

The erosion of the state's manufacturing base is not new; what is new is that the falling dollar "will make our manufacturing exports more competitive internationally," Woodward said. "Exports should increase. The depreciating dollar also should boost the state’s tourism, notably from Canadians flocking south to take advantage of their strengthened currency."

The plummeting dollar and higher energy prices should put pressure on consumer price inflation next year, Woodward said, but the situation should not be anywhere near as bad as the economic doldrums of the 1970s, when inflation and unemployment rose to double-digit rates.

Dr. Alvaro Cuervo-Cazurra

Ireland's recent economic transformation has led to "very successful" development, Cazurra said, while South Carolina still has below-average per capita income and continues to lose manufacturing jobs. Ireland's pro-business focus (including low taxes), huge investment in education, and open migration policies have made the difference, Cazurra said.

Dr. William F. Fox, Keynote speaker

The goal of tax policy should not be just to be a low-tax state, he said. Instead, the state needs to put in place a tax system that grows with the need for education and infrastructure. South Carolina should also think twice before it shifts taxes away from stable sources, such as property taxes, to more mercurial levies, such as sales taxes, he said.

Fox said he recommends following the approach of broad tax bases and low tax rates.

Executive Director of the S.C. Council on Competitiveness, George Fletcher, gave an update on South Carolina's competitiveness status.

Jan Collins
December 2007

PRESS RELEASE

Conference data is available  here

Audio files and copies of the presenters' PowerPoint slides are linked below. The audio files are MP3 format. The presentation files are Microsoft PowerPoint or Acrobat PDF.

Teegen Welcome and Introduction	Fletcher Status Report New Carolina— S.C.'s Council on Competitiveness	Woodward Forecast: Global and National for 2008	Guimarães S.C. Local Economic Indicators for 2008	Cuervo-Cazurra Carolina and Celtic Tiger: What We Can Learn from Ireland's Development	Fox "Sound Tax Policy for a Competitive Economy" Introduction by Joel Smith
	Presentation	Presentation	Presentation	Presentation	Presentation
Audio	Audio	Audio	Audio	Audio	Audio