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South Carolina economy growing at steady pace

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By Marc Rapport

South Carolina’s economy seems to be on a steady course. While the growth of the past several years has leveled off, the state’s job market is indeed growing, to the point where good help can be hard to find.

Meanwhile, the new Trump administration’s effect on the economy and world markets remains unknown, but early indicators are that a pro-business climate will be, well, good for business.

USC research economist Joey Von Nessen said he thinks South Carolina's economy will continue to build on its current momentum. (Photo/Chuck Crumbo)That was the bottom line from the experts from the Darla Moore School of Business at Thursday’s 36th annual Economic Outlook Conference, held this year in the Capstone House on the USC campus.

Research economist Joey Von Nessen and longtime USC economics research director Doug Woodward project job creation ― which they call the “single best predictor of economic performance” ― to grow 2.6% in the coming year.

While that’s a bit lower than the 3% or a bit higher posted annually in the recovery years since the Great Recession that began in 2007, it’s still nothing to sneeze at.

“South Carolina’s economy is growing at a healthy pace, and we expect the state to continue to build on this momentum in 2017,” Von Nessen said.

Von Nessen said that steady growth is actually occurring amidst a “paradigm shift” in the Palmetto State’s economy. He said that shift comprises three major points: the leveling off of economic growth, a tighter labor market, and strong housing demand.

Advanced manufacturing and business and professional services were two areas of continuing strength in job creation, while the construction sector was boosted both by increased housing demand on the coast and by the recovery from the October 2015 floods. Hurricane Matthew cleanup should keep that going well into 2017.

Those factors help result in a statewide unemployment rate forecast to decrease slightly from the current 4.7% to approximately 4.5% over the next 12 months. The economists noted that anything under 5% is often considered to be full employment, roughly meaning that anyone who wants a job either has one or can get one.

But the state’s “skills gap” complicates the matter. While the fact that employers struggle to find qualified employees in the state is not really a new phenomenon, the increasing demands of a high-tech, advanced manufacturing environment could make that more complicated.

That will be the challenge faced by Lt. Gov. Henry McMaster, who would take over when Gov. Nikki Haley is confirmed as U.S. ambassador to the United Nations. Haley came in when unemployment was high, and her focus was on recruiting new employers and incenting existing firms to expand.

“McMaster will likely inherit a healthier economy in which unemployment is relatively low, and a skills gap that prevents many workers from being hired,” Von Nessen said.

Trevor Knox knows they mean. The vice president of sales and marketing for the Terminix franchise that operates more than 50 locations in South Carolina and part of North Carolina was one of about 150 business people in attendance Thursday.

“I would say I feel confident that the state’s economy is moving forward in the right direction, and that as a business operated throughout South Carolina, we have great opportunities to position ourselves for success particularly in certain markets like Myrtle Beach and Charleston,” Knox said after the conference.

“But our challenge remains hiring great people who are self-motivated, are great with people, and willing to do the dirty work. In a low unemployment economy, that might be hard to find as we move forward,” Knox said.

Of course, Columbia and South Carolina also don’t exist in a vacuum. A rising dollar makes exports more expensive, the economists noted, and a Trump presidency that threatens or imposes new tariffs could spark a trade war that would have global ramifications almost overnight, noted keynote speaker, Boston University economist Laurence Kotlikoff.

“The global financial system ― this faith-based, trust me banking system ― remains extremely fragile,” Kotlikoff said.

Contact Marc Rapport at colanews@scbiznews.com.

 

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