FOR IMMEDIATE RELEASE
December 3, 2007
Economists: Brace for rough ride in 2008;
University's Economic Outlook Conference projections not encouraging
South Carolinians can expect slower growth in both jobs and personal income in 2008, according to a report released Monday (Dec. 3) by University of South Carolina economists at the Moore School of Business' 27th annual Economic Outlook Conference.
After this year's 1.4-percent growth in employment, the job base in South Carolina is expected to expand by 1.1 percent in 2008. Personal income, another broad measure of the state's economic activity, should climb by 4.8 percent next year, down from 6.1 percent in 2007, according to the report which was compiled by Dr. Douglas P. Woodward and Dr. Paulo Guimarães, research economists in the Moore School's Division of Research.
The pair presented their findings to business and government leaders who attended the EOC, which is sponsored by the Moore School and the Palmetto Institute.
"The projected slowdown in job growth should still translate into a net gain of about 21,000 jobs," Guimarães said.
Woodward said economic angst exists among retailers and consumers this holiday season.
"We are entering the Christmas season with anxiety across the country about the status of the economy, as many of our indicators reveal lost momentum in late 2007," Woodward said. "With higher energy and fuel costs, coupled with the housing meltdown and a shaky stock market, consumers are curtailing spending. Retail sales are falling in some regions of our state."
Statewide, Guimarães said, retail sales are projected to grow 3.1 percent, just slightly above the inflation rate.
It may take a while for the state's unemployment rate to reveal the true nature of the economic situation, the university economists said. This widely followed measure of joblessness is subject to significant revisions, especially when the business cycle reaches a turning point, as it apparently has in late 2007. In 2008, the state's unemployment should average 5.8 percent but could drift higher if consumers and businesses continue to curtail spending.
"There is more economic uncertainty right now than at any time I have seen in 20 years of presenting an annual forecast for the state," Woodward said. "Honestly, we don't have a crystal ball. But we see more economic weakness than strength going into 2008."
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, following a 24.7 percent decline in 2007.
South Carolina's bedrock manufacturing employment is expected to continue to crumble, with projected job losses for 2008 reaching 4.2 percent. The forecast predicts 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.
"We're accustomed to seeing erosion in the manufacturing job base in South Carolina," Woodward said. "If there is a silver lining in this dark cloud, it would be that the falling dollar will make our manufacturing exports more competitive internationally. 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."
Still, the Moore School forecasters anticipate slow job growth across many sectors in 2008, including construction and retail trade.
"The falling dollar and higher energy prices should put pressure on consumer price inflation next year," Woodward said. "Overall, this scenario is starting to look like the son of stagflation; that is, a combination of stagnant economic growth and higher inflation that afflicted the 1970s economy."
Yet, this time around, the situation should not be anywhere near as bad as the economic funk of 1970s, Woodward said, when inflation and unemployment rose to double-digits rates.
The daylong conference featured an updated assessment of the Irish economy by Dr. Alvaro Cuervo-Cazzura, assistant professor of international business at the Moore School. Ireland continues to prosper, serving as a model of economic development for South Carolina to emulate. A luncheon address by Dr. William Fox, director of the Center for Business and Economic Research and professor of business at the University of Tennessee, focused on "sound tax policy for economic competitiveness."
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South Carolina Communities at a Glance in 2007
• Metropolitan areas posting the fastest job growth in 2007 (through September): Myrtle Beach (2.9 percent), Florence (2.5 percent), Charleston (2.6 percent) and Greenville (2.5 percent). Overall, 2007 employment growth is decelerating across all regions of the state when compared with the first nine months of 2006.
• Metropolitan areas posting the fastest retail growth in 2007 (through September): Anderson (5.7 percent), Columbia (4.9 percent) and Charleston (2.0 percent). Again, retail sales are trending down across the state. In Myrtle Beach and Spartanburg, sales fell below the inflation rate. In Sumter, retail sales through September were negative when compared with the first nine months of 2006.
• Across most areas of South Carolina, residential construction activity has plummeted. Residential construction (measured by square footage) through September 2007, when compared with activity through September 2006, dropped 49.9 percent in Myrtle Beach and 26.3 percent in Spartanburg.
December 3, 2007
Economists: Brace for rough ride in 2008;
University's Economic Outlook Conference projections not encouraging
South Carolinians can expect slower growth in both jobs and personal income in 2008, according to a report released Monday (Dec. 3) by University of South Carolina economists at the Moore School of Business' 27th annual Economic Outlook Conference.
After this year's 1.4-percent growth in employment, the job base in South Carolina is expected to expand by 1.1 percent in 2008. Personal income, another broad measure of the state's economic activity, should climb by 4.8 percent next year, down from 6.1 percent in 2007, according to the report which was compiled by Dr. Douglas P. Woodward and Dr. Paulo Guimarães, research economists in the Moore School's Division of Research.
The pair presented their findings to business and government leaders who attended the EOC, which is sponsored by the Moore School and the Palmetto Institute.
"The projected slowdown in job growth should still translate into a net gain of about 21,000 jobs," Guimarães said.
Woodward said economic angst exists among retailers and consumers this holiday season.
"We are entering the Christmas season with anxiety across the country about the status of the economy, as many of our indicators reveal lost momentum in late 2007," Woodward said. "With higher energy and fuel costs, coupled with the housing meltdown and a shaky stock market, consumers are curtailing spending. Retail sales are falling in some regions of our state."
Statewide, Guimarães said, retail sales are projected to grow 3.1 percent, just slightly above the inflation rate.
It may take a while for the state's unemployment rate to reveal the true nature of the economic situation, the university economists said. This widely followed measure of joblessness is subject to significant revisions, especially when the business cycle reaches a turning point, as it apparently has in late 2007. In 2008, the state's unemployment should average 5.8 percent but could drift higher if consumers and businesses continue to curtail spending.
"There is more economic uncertainty right now than at any time I have seen in 20 years of presenting an annual forecast for the state," Woodward said. "Honestly, we don't have a crystal ball. But we see more economic weakness than strength going into 2008."
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, following a 24.7 percent decline in 2007.
South Carolina's bedrock manufacturing employment is expected to continue to crumble, with projected job losses for 2008 reaching 4.2 percent. The forecast predicts 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.
"We're accustomed to seeing erosion in the manufacturing job base in South Carolina," Woodward said. "If there is a silver lining in this dark cloud, it would be that the falling dollar will make our manufacturing exports more competitive internationally. 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."
Still, the Moore School forecasters anticipate slow job growth across many sectors in 2008, including construction and retail trade.
"The falling dollar and higher energy prices should put pressure on consumer price inflation next year," Woodward said. "Overall, this scenario is starting to look like the son of stagflation; that is, a combination of stagnant economic growth and higher inflation that afflicted the 1970s economy."
Yet, this time around, the situation should not be anywhere near as bad as the economic funk of 1970s, Woodward said, when inflation and unemployment rose to double-digits rates.
The daylong conference featured an updated assessment of the Irish economy by Dr. Alvaro Cuervo-Cazzura, assistant professor of international business at the Moore School. Ireland continues to prosper, serving as a model of economic development for South Carolina to emulate. A luncheon address by Dr. William Fox, director of the Center for Business and Economic Research and professor of business at the University of Tennessee, focused on "sound tax policy for economic competitiveness."
####
South Carolina Communities at a Glance in 2007
• Metropolitan areas posting the fastest job growth in 2007 (through September): Myrtle Beach (2.9 percent), Florence (2.5 percent), Charleston (2.6 percent) and Greenville (2.5 percent). Overall, 2007 employment growth is decelerating across all regions of the state when compared with the first nine months of 2006.
• Metropolitan areas posting the fastest retail growth in 2007 (through September): Anderson (5.7 percent), Columbia (4.9 percent) and Charleston (2.0 percent). Again, retail sales are trending down across the state. In Myrtle Beach and Spartanburg, sales fell below the inflation rate. In Sumter, retail sales through September were negative when compared with the first nine months of 2006.
• Across most areas of South Carolina, residential construction activity has plummeted. Residential construction (measured by square footage) through September 2007, when compared with activity through September 2006, dropped 49.9 percent in Myrtle Beach and 26.3 percent in Spartanburg.