South Carolina finished 2013 strong and should continue its positive trend into 2014, according to some of the state’s leading economists.
In fact, economists said, the state is so strong that for the second year in a row, South Carolina is top in the nation among economic indicators.
The positive expectations were released Monday at the 33rd annual Economic Outlook Conference by University of South Carolina Darla Moore School of Business economists.
“We can begin to think of South Carolina, I think, as moving beyond recovery into expansion,” economist Joseph Von Nessen said at a press conference Monday. “We think of a recovering economy as one that is scrambling to get back to the level it was at before the previous recession. Now, many areas of South Carolina have achieved that and moving beyond that.”
Those areas that have moved into expansion include metropolitan areas like Charleston, Columbia and Greenville, and also include Aiken and Rock Hill, Von Nessen said.
Myrtle Beach also has experienced expansive growth as the state’s tourism and construction industries appear to be back to normal levels.
“Myrtle Beach has been a major leader among employment growth … there’s consumer demand, they’re more confident, they’re spending money,” Von Nessen said. “Either they have more money to spend … or they have the same amount of money to spend but they’re more willing to spend it. Either way this is a good sign going into 2014.”
Von Nessen said subcontractors appear to have the most growth, as new home building still hasn’t picked up.
An increase in these industries has lead to the state’s 7.5 percent unemployment rate, and economists said they expect that rate to drop to 6.8 percent this time next year.
Von Nessen called manufacturing the “primary source of job creation since 2009” in the state. While manufacturing didn’t have a strong 2013, it didn’t falter, according to the economist.
“(It’s) lower this year than it has been, but this is normal. Manufacturing growth has been very, very strong and that level of growth is not always sustainable,” Von Nessen said. He said Charleston and Anderson saw 8-10 percent growth in previous years.
What’s more concerning, Von Nessen said, is stagnant wages and the continued reliance of part-time employment by those seeking full-time employment in the state.
Inflation rose 2 percent, and the state saw 3.4 percent income growth. That number is expected to increase to 3.6 percent in 2014, according to Von Nessen.
The economist said that the state still has not reached pre-recession levels (70 percent) of part-time workers who would prefer full-time jobs. The current level is more near 90 percent, he said.
“Many in South Carolina are still working part time for economic reasons,” Von Nessen said. “It has remained high and hasn’t seen any depreciable decline.”
The labor force also hasn’t fully rebounded, according to economist Doug Woodward. He said that’s due to three factors: “Baby Boomers” retiring, young people delaying looking for work, and those on unemployment leaving the labor force once their jobless benefits run out.
“This is a national trend … it hasn’t returned to where we’d expect it to be in an expansion,” Woodward said.
Expectations for 2014 were hedged by adding “barring any major shifts in the U.S. Federal Reserve’s Monetary policy,” but Woodward said he expects interest rates to remain low — just not as low as in 2013.
Some other potential national impacts were rebuffed, however.
Woodward said the across-the-board federal budget cuts, known as sequestration, may have caused a slight dip early on in 2013, but the state continued strong despite it toward the end of the year. He said that’s due to local and state government spending increasing as federal dollars wane.
Another federal issue not likely to impact South Carolina’s economy in 2014 is the federal health care act, also known as “Obamacare,” according to Von Nessen. He said any impacts may not be felt in the Palmetto State until 2015, if at all.
“Most economists to this point have said the impact so far has been relatively minor,” Von Nessen said. “If the employer mandate goes into effect (in 2015), how are employers going to shuffle their hiring practices? And to what extent is that going to contribute to the problem of part-time employment that is independent of the health care law?”