June 11, 2014

South Carolina’s economy limped through 2013, Feds say

South Carolina’s economy, championed as one of the hottest in the Southeast, was actually fourth worst in GDP, according to U.S. Commerce Department.

South Carolina’s economy limped through 2013, despite its increasing job base, according to a report Wednesday from the federal government.

The state’s gross domestic product — the sum of the total production output of all its industries in a given year — grew at a mere 1.2 percent last year, according to the U.S. Commerce Department.

That output, released Wednesday in an annual report, put the state in 35th place among other states for economic growth. However, South Carolina’s $184 billion economy last year was up from $178 billion in 2012.

The unrevised 2013 numbers were unimpressive enough to raise the suspicions of at least one economist who studies economic conditions across the Palmetto State year round.

South Carolina’s 2012 gross domestic product was revised upward by Commerce’s Board of Economic Analysis to a 1.5 percent growth rate in the report released Wednesday, down significantly still from the 3.1 percent annual output reported in 2011.

“I can’t help but question the numbers, even though I understand who it is that is putting the numbers out,” said Mark Vitner, Wells Fargo senior economist in Charlotte.

Job creation in South Carolina has been on a tear the past year, Vitner noted. The unemployment rate fell in April to 5.3 percent, its lowest level in 13 years, and many of the new jobs created have been in the state’s better manufacturing sectors, including automotive, aerospace and tire production.

South Carolina also improved production output nearly across the board, Vitner said, showing positive gains in all but four of the 21 contributing sectors Commerce uses to measure gross domestic product.

Vitner suggested the GDP report, which covers June 2013 to June 2014, may not have had time to fully measure all the positive productivity gains in areas such as agriculture, while also acknowledging output losses registered in the state in areas such as healthcare and social assistance.

This year’s GDP growth will be revised as needed in next year’s report in June.

“We certainly stand by our report,” said Thomas Dail, BEA spokesman in Washington on Wednesday. “We don’t know what the revisions will be of course, because if we did, we’d put those out now, too.”

The U.S. gross domestic product in 2013 grew by 1.8 percent, according to the BEA, on a $16.7 trillion economy. South Carolina contributed 1.1 percent to national gross domestic product increase, the report said.

Regionally, the 12-state Southeast sector of the U.S. amassed only a 1.6 percent GDP increase in 2013, tying with the Great Lakes region to finish ahead of only the Mideast region, which includes New York, New Jersey, Pennsylvania, Maryland, Delaware and the District of Columbia.

Republican Gov. Nikki Haley, who has made jobs and the recovering S.C. economy a centerpiece of her 2014 re-election campaign, said the state is on the right track, though change is inevitable.

"What I think a lot of that GDP change, you're going to see, is just inventory sitting," Haley said Wednesday at a press conference with U.S. Sens. Lindsey Graham and Tim Scott at the Governor's Mansion.

"But we're not going to know, and we've got to watch this closely," she added.

Her focus would continue to be on attracting businesses that bring jobs that pay well to the state, she said, adding that there's a reason South Carolina’s economy has been called the fastest growing on the East Coast.

“Our goal is to keep the economy moving. ... There's a reason why they’re naming us the beast of the Southeast. The economy is turning. It's a lot different than it was in 2011, and my hope is that 2017-2018 is a lot different than it is in 2014,” Haley said.

Non-durable goods manufacturing was the largest contributing sector to U.S. real GDP growth by state, according to the report, but South Carolina’s non-durable goods manufacturing output was down .05 percent in 2013.

Administrative and waste management services and educational services rounded out the four S.C. sectors where output showed losses in 2013, with health care and social services leading the way at a 0.35 percent decrease.

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