South Carolina’s $17 billion-a-year economy is going into 2016 strong – likely to continue producing good-paying jobs and a growing labor force, some of the state’s foremost economists say.
Ending with a historic flood, 2015 put the state under the national spotlight as a tragic mass murder attracted a presidential visit, followed by a highly charged fight over the Confederate flag.
Still, South Carolina’s economy registered its highest growth rate since 2009, led by a comeback in housing, with a construction bounce expected over the next couple of years.
“The rebuilding effort is going to create a temporary stimulus for South Carolina’s economy in 2016,” said Joey Von Nessen, research economist at USC’s Darla Moore School of Business.
Dollars are expected to flow into the state through the Federal Emergency Management Agency and via insurance claims on behalf of residents and businesses as rebuilding from the October disaster gets under way in earnest, Von Nessen said.
Rural counties in and around the Midlands, and Charleston are going to be the primary benefactors of the post-flood rebuilding effort, he said.
“When you have a fixed amount of dollars of new spending activity going into a county,” he said, “the smaller the county … the larger impact that has.”
About half the state’s 46 counties were damaged by flooding, with initial estimates placing damages at $1.5 billion. However, USC economists said that total “is no where near” the final cost, which they predict could exceed Hurricane Hugo’s $7 billion loss.
Statewide, rebuilding from the flood’s aftermath could add 0.5 percentage points to employment growth in 2016, raising that index to about 3.5 percent, Von Nessen said. Major infrastructure repairs — including rebuilding bridges, roads or dams — could extend the positive economic impact farther, he said.
S.C. business leaders heard the findings Thursday at USC’s Annual Economic Outlook Conference, which assesses the state’s economic performance and conditions for the upcoming year.
Among other predictions, the economists said:
▪ The Federal Reserve’s quarter-percent increase Wednesday in its federal funds rate should not affect S.C. mortgage rates anytime soon. Jay Bryson, Wells Fargo Securities’ managing director and global economist, said short-term interest rates would go higher, but at a slow pace.
▪ Gasoline prices are a potential threat to the S.C. economy. Higher gas prices would cut into consumers’ disposable income.
▪ South Carolina’s booming export economy with China, Germany, Canada, Mexico and Great Britain could be hurt by the strength of the U.S. dollar.
▪ Unemployment, hovering at 5.5 percent in November, is expected to rise to an average of 6 percent as more workers come into the job market. Wages also are on the rise for the first time since the recent recession.
“Our economy has rarely appeared this steady, strong and resilient — even in the face of an historic, 1,000-year-storm we experienced here in October,” said Doug Woodward, the Moore School’s research director. “We’re in an expansion that began in early 2009. This year turns out to be the best year for the expansion for our state.”
Roddie Burris: 803-771-8398