Doug Woodward, director of research, and Joseph Von Nessen, a research economist, presented their 2017 forecast Thursday (Dec. 8) to more than 150 of the state’s business and community leaders at the 36th Annual Economic Outlook Conference (EOC). They reported that the state is poised to build on its existing momentum and to continue generating new jobs and rising incomes for South Carolinians.
They expect job creation — the single best predictor of economic performance — to grow 2.6 percent in 2017.
“South Carolina’s economy is growing at a healthy pace,” said Von Nessen. “And we expect the state to continue to build on this momentum in 2017.”
He said the South Carolina’s economy also is in the midst of a “paradigm shift,” which will bring new challenges for the state in 2017.
“For the last several years, our rate of economic growth has been accelerating, but in 2016 it leveled off and is now growing at a constant rate,” Von Nessen said. “In addition, the labor market has strengthened considerably. Our unemployment rate has dropped to 4.7 percent. And although this is good news for workers, it also means that employers are now struggling to find qualified employees to fill new positions. Going forward, if we want to achieve a higher rate of economic growth, this skills gap will have to be addressed.”
Tackling a skills gap will likely be an important part of the next governor’s mission. Current Gov. Nikki Haley has been tapped to join the Trump administration in the new year and will be replaced by Lt. Gov. Henry McMaster.
“Gov. Haley came into office with a priority to generate employment opportunities for South Carolinians during a period of high unemployment following the Great Recession,” Von Nessen said. “Lt. Gov. McMaster, by contrast, will likely inherit a healthier economy in which unemployment is relatively low, and a skills gap that prevents many workers from being hired.”
The economists said two industry sectors led the broad-based growth in 2016.
The manufacturing sector and the professional and business services sector were the fastest-growing industries this year, having driven high-wage job creation throughout the state and supporting high rates of consumer spending.
“We are seeing strong job growth within the professional service sectors as well as within aerospace, automotive and tire manufacturing,” Von Nessen said. “Each of these industries is creating jobs that pay significantly above the state average. In turn, these workers are spending their wages in South Carolina and thus creating additional economic activity.”
They also identified the construction sector as a bright spot.
Construction played a key role in South Carolina’s economic growth in 2016, especially along the coastal regions of the state. In addition to the overall strengthening of housing demand, which experienced lackluster growth from 2010 to 2015, the construction industry was propelled by rebuilding efforts going toward repairing damage from the historic 2015 flood.
In fact, Woodward and Von Nessen estimate that more than 20,000 temporary S.C. jobs will have been created in the construction and retail sectors by the time the rebuilding process is completed. They also expect a similar, though smaller, stimulus in the construction industry to occur in 2017 as a result of Hurricane Matthew.
The economists anticipate the size of the labor force to continue to grow in 2017 as job opportunities continue to rise, which implies marginal decreases in the unemployment rate over the next year.
The Moore School forecast outlines an unemployment rate over the next 12 months that will drop slightly from its current rate of 4.7 percent to approximately 4.5 percent. However, total personal income is shown to grow at 4.8 percent in 2017 — a rate comparable to its growth rate in 2016.
The daylong Economic Outlook Conference also included a keynote address from Boston University economist Laurence Kotlikoff on how the new Trump administration will likely affect the U.S. economy. The two most significant economic impacts of a Trump presidency on the Palmetto State are a possible renegotiation or elimination of trade deals and changes in military and veteran spending. Manufacturing exports and the state’s military presence play major roles in the state’s economy.
Kotlikoff also addressed the federal budget, debt and other critical issues that will face the new administration in 2017.
The conference also featured presentations on South Carolina’s long-run competitiveness by Meghan Hughes Hickman, executive director of EngenuitySC, and Ann Marie Stieritz, president and CEO of the South Carolina Council on Competitiveness.
South Carolina communities at a glance
Employment:
In 2016, South Carolina experienced gains in employment across most major metropolitan regions of the state (October 2016 employment compared with October 2015).
The largest gains occurred in Rock Hill (+3.4 percent) and Charleston (+3.2 percent). More modest gains occurred in Anderson (+2.2 percent), Columbia (+2.0 percent), Spartanburg (+1.9 percent) and Greenville (+1.3 percent). Sumter experienced minor employment losses over the past year (-0.3 percent).
Retail trade:
Retail trade employment in South Carolina saw steady gains throughout 2016 culminating in a growth rate of 1.8 percent as of October 2016 (October 2016 compared with October 2015). Additionally, several regions of the state witnessed more sizable gains. Regions of the Palmetto State with gains in retail trade that exceeded the state average occurred in Spartanburg (+5.2 percent), Myrtle Beach (+2.9 percent) and Charleston (+2.3 percent).
Housing:
Single-family residential building permit activity was up across most of the state over the past year. Comparing single-family residential building permits issued in October 2016 with those issued in October 2015, major gains were seen in Spartanburg (+37.8 percent) and Greenville (+12.9 percent). More modest gains were observed in Myrtle Beach (+7.3 percent), Florence (+5.4 percent), Sumter (+5.4 percent), Columbia (+5.1 percent) and Charleston (+2.0 percent).
Unemployment:
Unemployment rates in October 2016 declined across all metropolitan areas compared with October 2015. The largest decline occurred in Darlington (-1.3 percent) and Florence (-1.3 percent). This was followed by Columbia (-1.1 percent), Sumter (-1.1 percent), Myrtle Beach (-1.1 percent), Charleston (-0.9 percent), Spartanburg (-0.9 percent), Rock Hill (-0.8 percent), Greenville (-0.7 percent) and Anderson (-0.7 percent).
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