Exclusive: South Carolina Economy Expected to Continue Slow, Steady Growth
Thursday, December 5th, 2019
Like the long-distance runner it’s become, the South Carolina economy should grind out another year of slow, steady growth, according to experts at a University of South Carolina forum.
The 39th annual Economic Outlook Conference, held Tuesday at the school’s alumni center, featured economists from the Darla Moore School of Business. USC President Robert Caslen and Wells Fargo economist Sarah House also spoke.
In light of the Great Recession that preceded it, Doug Woodward, director of the business school’s research division, says the current growth period – now the longest in United States history – should be called the “Great Expansion.”
“The outlook is very good,” he said. “We’re going into the year with the economy very buoyant.”
USC economists predict the state’s unemployment rate to remain at a record-low 2.6% throughout 2020.
“Ten years ago, South Carolina’s unemployment rate was 11.6%,” said Joseph Von Nessen, a USC research economist.
Job creation, which grew by around 1.8% for most of 2019, will slow to 1.5% in 2020 in South Carolina, they said.
“This is not all due to slowing demand,” Von Nessen said. Nationally, there are more job openings than there are unemployed workers. “We expect that to be a bottleneck for growth.”
A labor shortage isn’t all bad, however.
“It’s excellent news from a worker’s perspective,” Von Nessen said.
USC is predicting personal income growth of 5.6% in 2020, approximately one percentage point higher than this year.
“Finally in this expansion we’re seeing wage growth for low-wage workers,” Woodward said. “That’s going to bring people into the labor market.”
South Carolina’s tourism sector did well in 2019, they said, while manufacturing slowed somewhat. One area where that was evident was in the lower number of temp workers being used by the state’s factories.
“Manufacturers are trying to wait out this trade uncertainty,” Von Nessen said. He described the ongoing disagreement over tariffs between China and the U.S. to be a “wild card” for the economy in 2020.
While describing the Palmetto State economy as “resilient,” Von Nessen added that a recession is more likely now than it was at this time last year. That’s primarily because a slower-growing economy is more susceptible to a shock such as an all-out trade war.
House said trade uncertainty is curtailing business investment, which she predicts to grow 2% nationally.
“Typically at this point in an expansion, you’d be seeing investment growing 3-4%,” she said.
Wells Fargo predicts gross domestic product to grow 1.8% in 2020, following 2.3% in 2019. Consumer spending growth should slow to 2.2% after growing at 2.6% in 2019. It’s possible the Federal Reserve could cut interest rates early in 2020, House said.
“When you step back and look at the fundamentals of the economy, they remain pretty good,” she said. “Household balance sheets are some of the strongest we’re seen in decades.”
Caslen, who was hired earlier this year, was making his first appearance at the conference. He spoke about the opportunities for USC’s Columbia and Aiken campuses to attract funding for defense-related research.