USC Economists Forecast Slow, Steady Growth in 2018
Monday, December 11th, 2017
Economics is known as “the dismal science,” so it was fitting that the weather broke dreary, wet and cold as members of the business, higher education and government communities got together Friday to discuss South Carolina’s economic outlook for 2018.
Inside, the forecast proved to be mostly sunny, with few headwinds.
“The South Carolina economy remains buoyant,” said Dr. Douglas Woodward at the University of South Carolina’s 37th Annual Economic Outlook Conference. Woodward is the director of the research division at USC’s Darla Moore School of Business.
USC researchers expect the U.S. economic expansion, currently in its ninth year, to eventually surpass those of the 1960s and 1990s.
“This is going to be a historic year and it’s going to extend into 2019,” Woodward said. “The state will follow in line with the U.S. economy.”
In South Carolina, USC researchers predict the unemployment rate, currently at 3.9 percent, to drop to 3.6 percent by the end of 2018. Job creation will grow at a 2.1 percent rate.
Those two factors will lead to a tight labor market. That in turn will boost personal income, which is expected to grow by 4.3 percent (compared to 3.9 percent in 2017).
In an effort to fill jobs, South Carolina will need to hone strategies for recruiting workers from out of state, Woodward said.
Workforce development will also be crucial, although the state already has robust programs in place to teach technical skills.
“They can train them,” Woodward said. Finding folks who can show up to work on time and pass a drug test is another matter. “The major problem is on the soft-skill side – the work ethic.”
“There are worse problems to have,” Woodward added. “We could be in a recession with 10 percent unemployment.”
The conference included presentations from Cheryl Stanton, executive director of the S.C. Department of Employment and Workforce, who spoke about current workforce development initiatives, as well as Joan Robinson-Berry, vice president and general manager with Boeing South Carolina, who spoke about the job training needs of the future.
Gov. Henry McMaster also stopped by, fresh from an announcement at the Samsung facility in Newberry, where USC and Clemson University announced an R&D partnership with the electronics manufacturer.
“We’re right in the middle of an upswing that I think is going to last for generations, if we don’t mess it up,” McMaster told the audience.
What could mess it up? Dr. Joseph Von Nessen, a USC research economist, pointed out two potential pitfalls.
The Federal Reserve Board could mistime its manipulation of interest rates. USC expects the Fed to raise rates at its Dec. 12-13 board meeting and vote for hikes up to three times in 2018.
White House decisions regarding trade policy could also spell trouble for the South Carolina economy, which is dependent on exports.
“Both of those threats are relatively minor,” Von Nessen concluded.
But does the near-record length of the current expansion put it at risk of fizzling out?
“Expansions don’t die of old age,” Von Nessen said. “Market fundamentals are strong and the state’s economy is in a very good position as we head toward 2018.”