THE ISSUE: S.C. economic outlook
OUR VIEW: Industrial success stories continue; challenges ahead
Monday saw announcements of new jobs in Berkeley and Jasper counties. On Tuesday, Agru America Inc. announced it is expanding its geosynthetics operations in Georgetown and Williamsburg counties to the tune of $39.1 million and 126 new jobs.
Closer to home, it appears German-based Klausner Holdings is looking at 248 acres off Rowesville Road as the site for what could the largest sawmill in the state and a projected 300 jobs. Plus, a staple of the Orangeburg County industrial lineup, Albemarle Corp., is planning a multimillion-dollar expansion of its Cannon Bridge Road plant. The company is expecting to invest $65 million and create 20 new jobs over the next five years. The project will be formally unveiled Monday, Dec. 17.
The developments continue South Carolina’s success in attracting industry during challenging times. Gov. Nikki Haley’s administration may be taking heat on a number of fronts, but the governor and Secretary of Commerce Bobby Hitt can say their announced investment/job creation during two years in office is no small achievement.
The Commerce Department states that since January 2011, South Carolina has recruited more than $7 billion in capital investment and more than 18,000 jobs in the manufacturing sector.
Wednesday brought good news looking ahead — if the federal government does not kick the economy back into recession.
The Darla Moore School of Business’ 32nd Annual Economic Outlook Conference was held at the University of South Carolina. It is an annual event from which the economic forecast is widely anticipated.
Doug Woodward and Joseph Von Nessen, economists in the Moore School’s Division of Research, told the 250 business and government leaders at the conference that South Carolinians can expect more stable growth across a broader array of industries in 2013 if Washington strikes a deal and averts the fiscal cliff. The growth would mean more jobs and greater income for the state’s residents.
Job creation – the most important measure of economic progress in South Carolina – is expected to grow 1.2 percent in 2013, according to Woodward and Von Nessen. Last year they predicted employment growth of 2 percent, which came very close to South Carolina’s performance of a 1.8 percent increase based on a comparison of October 2011 and 2012 employment figures.
Von Nessen said the Palmetto State will see growth in the coming year from industries that extend beyond manufacturing.
“Though manufacturing has largely been responsible for South Carolina’s economic recovery, we’ve started to see other industries expand this year, and we expect more diverse growth in 2013,” Von Nessen said.
Gains are expected in transportation and warehousing, health care, education and even construction, an industry that has been hard hit during the recession.
“Residential construction turned a corner in 2012,” Von Nessen said. “Sales activity is up and house prices are rising again, which suggests a better year for housing ahead.”
Von Nessen expects construction to increase throughout 2013 and anticipates industry job growth for the first time since 2008.
However, he said the nation and state are at a precipice, facing prosperity or peril depending on the actions of Congress.
“The demand is there, but the resolution of the fiscal cliff is a major piece of the puzzle that remains,” Von Nessen said. “We don’t know what the resolution will be, but we definitely will feel the effects in South Carolina of any increases in marginal tax rates, payroll taxes or reductions in federal funding to our state through various measures such as military sequestration or the elimination of extended unemployment benefits.”
John Connaughton, an economist at UNC Charlotte, is likely on target in saying the economy here and elsewhere is going to be negatively affected no matter what.
“We are going over a ‘fiscal cliff’ on Jan. 1, 2013. The only question is how severe,” said Connaughton, Babson Capital professor of financial economics. “If Congress and the president don’t reach a deal by Jan. 1, the consequences could be quite bad and the U.S. economy would enter into a mild recession during the first half of the year. Unemployment, nationally, could reach 9 percent by the fall of 2013.
“If Congress and the president do reach a deal, the most likely scenario is that the combined tax increases and spending cuts will be enough to slow the economy to a 1 percent or less growth rate during 2013. There is no good economic outcome to these talks. 2013 will be a year where we pay for our borrow-and-spend past,” he said.
So be it. For individuals, paying the bills is a fact of life. It must be so for the country too.