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2010 Outlook for the South Carolina Economy

2010 Outlook for the South Carolina Economy. Recovery or Relapse? Doug Woodward Division of Research. 2010 U.S. Outlook. 2009 was year of government activism. Massive fiscal stimulus. Low interest rates. Direct monetary intervention in credit (mortgage) markets. There will be a recovery .

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2010 Outlook for the South Carolina Economy

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  1. 2010 Outlook for theSouth Carolina Economy Recovery or Relapse? Doug Woodward Division of Research

  2. 2010 U.S. Outlook • 2009 was year of government activism. • Massive fiscal stimulus. • Low interest rates. • Direct monetary intervention in credit (mortgage) markets. • There will be a recovery. • But slow growth for private sector activity in 2010. • Relapse?

  3. South Carolina’s Economic Prospects in 2010 Boeing is big. Leading economic indicators look good.

  4. Uncertainty • Dysfunctional financial system • Leverage and debt • More surprises? • From excessive credit to no credit • Despite bailouts • Choking private expansion

  5. A Lasting Recovery … No Relapse No more financial shocks Virtuous cycle of U.S. GDP growth Spending Investment Jobs

  6. Dr. Doom: No Lasting Recovery • Predicted recession • Possibility of a W-Shape rather than V- or U-shaped. • Unemployment rates in the mid-double digits • 15% or above unemployment rate, with and multi-year stagnation in economic activity. http://www.rgemonitor.com/

  7. V-Shape?

  8. Keys to a Sustained Recovery • Monetary and fiscal stimulus will fade • Consumer spending • Sales • Private investment • Risk taking

  9. S.C. Real Retail Sales‏ 12-Month Moving Average

  10. 07/08 08/09 (up to Oct)‏ 7.3% -14.3% Anderson 0.8% -14.9% Charleston-N Charleston -0.6% -11.9% Columbia 5.3% -11.6% Florence 2.6% -15.1% Greenville -6.0% -13.3% Myrtle Beach-Conway-N Myrtle Beach 5.6% -4.1% Spartanburg -3.4% -12.3% Sumter South Carolina Metro Areas (MSAs):Real Retail Sales

  11. Business Investment

  12. Source: U.S. Department of Commerce: Census Bureau.

  13. S.C. Growth of Single FamilyHousing Permits

  14. Monetary Stimulus Needed • Trillions from U.S. Treasury and Fed • Liquidity • Low, low rates • Extra monetary easing by Fed • Credit crunch continues • A solvency problem?

  15. $800 billion, with half still unspent Shovel-ready projects Infrastructure Restoration of state cuts Short-term: Multiplier effect Long-term: Comb-over effect Fiscal Stimulus

  16. Forecast for South Carolina’s Economy in 2010

  17. Outlook for 2010:Personal Income

  18. Outlook for 2010:Total Employment

  19. Difference %Change 1,100 1.1% Government -26,600 -11.2% Manufacturing -6,700 -2.9% Retail Trade 4,400 2.0% Professional & Business Services -8,000 -3.8% Leisure & Hospitality Services -1,000 -0.5% Education and Health Services -16,900 -14.9% Construction -3,200 -3.0% Financial Activities Employment Growth by Sectors of Activity 2008/2009

  20. Oct 08 Oct 09 %Change 62.8 61.4 -2.2% Anderson 300.8 292.9 -2.6% Charleston-N Charleston 364.2 361.2 -0.8% Columbia 87.9 87.2 -0.8% Florence 320.1 309.5 -3.3% Greenville-Mauldin-Easley 120.7 116.1 -3.8% Myrtle Beach-Conway-NMB 129.0 124.7 -3.3% Spartanburg South Carolina Metros (MSAs):Total Nonfarm Employment

  21. Outlook for 2010:Unemployment Rate

  22. Conclusion • Fragile recovery. • Distress in the financial system. • Running out of tricks. • Weak job market. • Slow growth in income. • Relapse possible.

  23. Additional information available at: http://mooreschool.sc.edu/moore/research/ Thank you!

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