South Carolina’s economy is the strongest it has been in at least 20 years — eclipsing even its heady, prerecession performances — and stands on solid ground for 2016, USC economists said Tuesday.
More jobs with higher wages are being created at the same time workers are seeing higher wages in the current jobs, the economists said. It’s the first time both indicators have risen since the Great Recession.
That economic cycle, which fuels consumer spending, is predicted to continue into 2016, said Doug Woodward, research division director at the USC Darla Moore School of Business.
“In 28 years of forecasting our state’s economy, rarely have I seen our economy in such good shape and on such steady footing,” Woodward said Tuesday during a preliminary briefing on the state’s economic outlook for 2016. A more detailed analysis will be presented during USC’s 35th annual Economic Outlook Conference at the Moore business school.
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“By July 2016, we predict the (S.C.) economy will enter its seventh year of economic growth. It’s taken a while, but most of the state now is better off than it was a decade ago – by quite a bit.”
Woodward said the South Carolina economy has been strong and resilient, even in the face of a historic rainstorm in October. He said 2015 has been the best year of the long, post-2009 recovery and expansion.
Because of advanced manufacturing in the state’s automotive and aerospace clusters, South Carolina and the southeastern U.S. have become one of the world’s fastest-growing markets, according to Joseph Von Nessen, USC research economist and co-author of the state economy forecast.
The southern U.S. has a higher economic growth rate than the national average, Von Nessen noted, and South Carolina has both benefitted from that advantage and created its own footprint.
For the first time since the Great Recession, Von Nessen said:
▪ South Carolina’s economic growth rate significantly exceeds the prerecession economic growth rate between 2002-2007.
The state’s overall employment growth rate this year was 2.8 percent, up from 2.3 percent in previous expansion years, Von Nessen said. The growth has been spread across most industries in the state and most regions, he said.
▪ New jobs that pay significantly higher than the state’s average wage have been created at the same time the pay at existing S.C. jobs have increased significantly.
“That is causing more people to be able to ‘feel’ the expansion,” Von Nessen said. While previous average wage gains had been caused mainly by the unemployed landing jobs during the recovery, longer-term employees are now seeing wage gains too, he said.
Professional services jobs such as in engineering, computer software design and legal services have seen significant wage growth in 2015 for the first time since the recession, Von Nessen said.
Overall, South Carolina is beginning to see a greater demand for workers, Von Nessen noted, just as the Federal Reserve Board is poised to possibly raise some interest rates in a few weeks.
Personal income in South Carolina is expected to grow by 4.9 percent in 2016, Von Nessen said, up from 4.6 percent this year. U.S. personal income growth averaged about 4 percent in 2015, and South Carolina has consistently beaten the national average, he said.
▪ Retail employment growth is expected to remain strong in 2016, Von Nessen said. Increases in consumer spending caused by more discretionary income is the main cause of increased hiring in the retail sector, the USC economists said.
Retail employment growth in South Carolina doubled in October from the same month in 2014, to 4.5 percent, Von Nessen said. In Columbia, retail job growth improved 4.3 percent, though Greenville led the state at 6.2 percent in October.
But while the state’s economy may be resilient, it was impacted by the October floods.
Arden Korn at Little Lambs & Ivy, a baby and children’s store on Devine Street, was having a banner year in 2015. She estimated her sales were up 12 percent over 2014.
As the economy improved, she said more people felt secure enough to have children, and grandparents felt more willing to spend more on their grandchildren.
“But in October after the flood hit, people just didn’t shop, and understandably so – a lot of our customers were affected by the flood,” said Korn, who has owned the Devine Street store since 2007 and had a shop in Memphis, Tenn., for two decades before that. People who didn’t lose anything in the flood felt guilty and then didn’t go shopping, Korn said.
Even with the slowdown in sales because of the flood, she said she still expects to have a very good year when the books are closed.
Von Nessen said those figures are backed up by the increase in the number of people working in retail in South Carolina.
He also said he was not surprised by the flood’s effects on sales, particularly in shops like Korn’s that draw customers from the Forest Acres and Lake Katherine, two areas among the hardest hit by the floods. “Her story is typical for a lot of people in that area,” Von Nessen said.
Meanwhile, the number of homes constructed in 2015 exceeded the number of remodeled homes for the first time in the economic recovery, Von Nessen said. “The reason for that is we’re seeing more people choosing to buy new homes because they are more likely to be employed, more likely to have disposable income.
“That is good for housing and we haven’t seen it up until 2015,” Von Nessen said.
Roddie Burris: 803-771-8398