S.C. economic outlook iffy, expert says

COLUMBIA -- South Carolina has dodged a recession so far, but signs from the rest of the nation bode ill for 2008, according to a report Monday from the University of South Carolina.

USC economist Doug Woodward said he has been troubled by a nationwide tightening of lending, which claimed Wall Street investment giant Bear Stearns earlier this month. But he said the Federal Reserve's actions, including support of a buyout of Bear Stearns, show the Fed is responding aggressively to prevent a credit crisis.

"There's nothing that would throw us into a recession more than that," Woodward said. "As goes the nation, so goes South Carolina."

The source of the credit crunch has been declines in real estate and construction, in South Carolina and the rest of the nation, said Woodward, who oversees preparation of the monthly report South Carolina Economic Indicators.

Woodward and other researchers at Moore School of Business prepare the report looking at numerous statistics.

Several, including building permits, have been reliable predictors of the economy's future direction. And those future indicators have been falling for six months.

Statewide residential construction has been one of the main drags.

In January, construction was 34 percent below that of January 2007. Single-family housing permits fell to the lowest level in 10 years in January, down 67 percent from a year ago.

Meanwhile, other measures in the report, such as manufacturing activity, are indications of the economy's current health. They show exports have slowed factory-job losses.

And Woodward said he was surprised to see overall job growth in South Carolina. This indicator of past economic performance shows South Carolina continued to produce jobs at a steady pace last year and through February, even as the state's jobless rate has been hovering above 6 percent.

"We know construction has been in recession, but the rest of the economy doesn't seem to be," he said. "Through February, I don't see how anyone can say we're in a recession. But our leading indicators are saying 'watch out,' because our barometer is dropping pretty fast."