South Carolina can expect -some- job and income growth next year, according the annual economic forecast by University of South Carolina economists. Dr. Doug Woodward with the Moore Business School’s Division of Research addressed business and government leaders Wednesday at the school from all over the state and region.
“No doubt, 2009 was the worst year for the economy that most of us have seen in our lifetime,” said Woodward. “The good news is 2010 can only get better and it will get better. We’re looking for moderate job growth, just above zero percent, but we had negative growth in 2009, as was the case with the rest of the country.”
But Woodward says the 0.2 percent rise in job growth won?t be high enough to make a dent in the state?s historically high unemployment rate. Personal income is expected to reverse course and climb by 3.3 percent in 2010, up from minus 1.4 percent this year.
The keynote speaker for Wednesday’s event was Sonoco Products President and CEO Harris Deloach, Jr. Woodward says Sonoco is one of those South Carolina companies that’s correctly poised in difficult times, diversified across product lines and markets, with a presence in Brazil and China.
Woodward says the recession has made a lot of companies like Sonoco more lean and mean. “Productivity is rising but they’re doing that with fewer workers,” said Woodward. “So they’re depending on demand, on sales, and having to justify any new hiring. The key to growth is more demand, internationally. The same is true with Boeing, BMW, any business. More demand and they’ll start to hire.”
Board of Economic Advisers Chairman John Rainey has said that he would not be surprised by 13 percent unemployment by the end of next year, and a recovery period of five or six years just to return to where the jobless rate was 18 months ago. Woodward responds.
“We don’t see it quite that bad,” said Woodward. “But there is a lot of truth in that. It will take years for us to see a dent in our 12 percent unemployment rate. At this conference a few years ago we were talking about six percent unemployment being too high. We need six percent or lower for a healthy economy, to have jobs.”
Woodward says with the falling dollar and higher energy prices, there will be upward pressure on consumer price inflation in 2010. But at the same time, he says the cheap dollar may boost the state’s tourism.
Woodward says he expects South Carolina’s unemployment rate to drop and hoover around 11.5 percent for most of next year. “Some forecasts say it will drift off to 15 or 20 percent like the Great Depression, but there is nothing we see that will make that happen right now,” said Dr. Woodward. “If the deterioration in the labor market had continued at the rate where it was earlier this year, then that may have happened. But things have stabilized.”
Woodward says the positive effects of the federal economic stimulus will be felt through mid-year. But he says if the economy sputters again, expect Washington to consider more deficit-financed stimulus spending. And he says the size of the federal budget deficit and its effects on higher prices and interest rates would then become a grave concern.