The South Carolina Board of Economic Advisors cut its revenue projections for what remains of this fiscal year’s state budget by $92 million. BEA Chairman John Rainey says the numbers are grim, but it’s time now to “play the hand that’s dealt us.”
“These are the numbers that are dealt us and even with those adjustments, that we’ve been given that we have not seen on a piece of paper yet, the late deposits, the items that did not make it on Friday because Sunday was the 31st, we’re still short $92 million.”
Rainey says he does not know how the Budget and Control Board or legislature will handle that on such short notice.
Governor Mark Sanford responded to the cuts in a statement late Thursday, saying, “We continue to believe that cuts as a result of these new estimates need to be done in a targeted, rather than an across the board, fashion.” Next year’s outlook prompted the panel to cut next years projection by $120 million.
Based in a drastic drop in personal and business income tax revenues, along continued in key business sectors in South Carolina, unemployment may reach 15 percent by this time next year. BEA Chairman Rainey says that seasonal employment figures will not help much.
“The infrastructure is in place on the coast,” says Rainey. “They’ve got enough people employed there to handle the restaurant and lodging business without any new hires. They just need more customers, so I don’t think we can look for large seasonal employment in the hospitality industry.”
The BEA called in economist Don Schunk from Coastal Carolina University to interpret today’s numbers and to help try to determine some trends to plan with . He says that with sluggish consumer spending, year over year job losses show “pretty ugly numbers” into 2010. But may get better in 2011, with certain signs.”We need to see that the decline in home sales stops, so that home sales stabilize and start to come back; that job losses month to month to month continue to get smaller-which they’ve been doing. But we’ve got a long ways to go.”
Key to that, says the Coastal Carolina economist, is a sustained resurgence in consumer confidence. “That’s going to be the ultimate indicator of whether we’re on the verge of recovery or not is that some of the gains that we’ve seen in the last few months in terms of consumer confidence, are those going to be sustained? If they are, then we can be on the verge of recovery. But there’s enough negative stuff out there that that consumer confidence uptick of the last couple of months, that could disappear easily over the next few months.”
Schunk says that even though consumers are getting their individual credit and saving in order, that does not immediately stimulate the economy.