S.C.'s Economic Fortunes Should Rise in 2012

Economic times are tough in South Carolina at the moment, but there are tenuous glimmers of hope for 2012.

Employment and income are expected to rise slightly next year and the state's leading indicators "are headed in the right direction." However, "the economic environment will remain fragile," a pair of economists at the Darla Moore School of Business at the University of South Carolina said Wednesday.

With a mix of optimism and cautiousness, Douglas Woodward and Joseph Von Neesen presented their economic forecast for 2012 to a gathering of business and government leaders at the school's annual economic outlook conference. While stopping well short of saying the state's economic travails are close to abating, 2012 is shaping up to be a better year than its predecessor.

"Right now, South Carolina's economy is stable, and 2012 should bring further incremental gains in job growth and personal income levels," Von Nessen said. "However, uncertainty is still high, and any market change could easily rock the boat." For instance, Woodward said, a looming European debt crisis, an uncertain stock market, and the upcoming U.S. presidential election are variables that could upset the economic calculus in the coming year.

But, following a one percent gain in 2011, total employment growth -- the most important indicator of economic growth -- is projected to be two percent in 2012, both men said.

The big gainer in South Carolina? Manufacturing. That sector, especially durable goods manufacturing, should have the biggest employment gains next year, they predicted.

"Manufacturing … what a surprise," said Woodward, who is the school's Research Division director and a professor of economics. Since last year, he said, the sector has seen 5.2 percent growth in the state, or an increase of 21,000 jobs. Both men said business and health services will likely see increases as well.

Further, housing and construction also will play a big role in the state's recovery, "but job growth must come first," Von Nessen said.

"Household formation is significantly below historical averages because unemployment is high," he said. "As job growth rises, this will help spur demand in the housing industry, which is very important to the recovery because construction and housing services make up more than 15 percent of overall economic activity."

Von Nessen said construction activity is expected to drop slightly early in 2012 then increase throughout the remainder of the year.

Projected job growth next year will help reduce the state's jobless rate, currently at 10.5 percent, which is the sixth-highest in the nation, "but it won't help much," Von Nessen said. (The state's truer unemployment rate, he noted, is 16.3 percent, which takes into account those who have given up finding work and those who have fallen off the radar because they have exhausted their unemployment benefits).

"Job growth and economic recovery will attract people back into the workforce who left because of a lack of employment opportunities," he said. "This will keep the unemployment rate higher than might otherwise be expected."

Among the counties in South Carolina that are poised to do well, "Charleston and Greenville really stand out," Woodward said. "Charleston is the hottest place in South Carolina. It's the leader."

The opening of a Boeing aircraft manufacturing plant this year certainly helps, but it goes beyond that, Woodward said. 

"It's not only one of the fastest growing in terms of employment, but in terms of the adult population that has a four-year degree or more, it has the biggest share increase of any city in the whole country in the last 10 years," Woodward said.