South Carolina Economic Update

Dr. Don SchunkResearch EconomistBB&T Center for Economic & Community DevelopmentCoastal Carolina University

October 5, 2009

1400

1500

1600

1700

1800

1900

2000

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

SC Total EmploymentJan. 1990 – August 2009

June 2000:1,883,300 jobs

August 2009:1,848,600 jobs

105000

110000

115000

120000

125000

130000

135000

140000

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

US Total EmploymentJan. 1990 – September 2009

Feb. 2001:132.5 million jobs

Sept. 2009:130.9 million jobs

60

70

80

90

100

110

120

130

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

Myrtle Beach MSA Total EmploymentJan. 1990 – August 2009

260

280

300

320

340

360

380

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

Columbia MSA Total EmploymentJan. 1990 – August 2009

220

240

260

280

300

320

340

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

Greenville MSA Total EmploymentJan. 1990 – August 2009

108

112

116

120

124

128

132

90 92 94 96 98 00 02 04 06 08

jobs

, 100

0s

Spartanburg MSA Total EmploymentJan. 1990 – August 2009

-8

-4

0

4

8

12

16

20

24

40 45 50 55 60 65 70 75 80 85 90 95 00 05

annu

al %

cha

nge

SC Total Employment: Annual Job GrowthJan 1940 – August 2009

August 2009:-4.1%

Recent Unemployment Trends in South Carolina

5

6

7

8

9

10

11

12

13

2008M01 2008M07 2009M01 2009M07

perc

ent

2

4

6

8

10

12

14

1980 1985 1990 1995 2000 2005

perc

ent

SC Unemployment RateJan. 1976 – August 2009

0

50000

100000

150000

200000

250000

300000

88 90 92 94 96 98 00 02 04 06 08

Unemployed (number)Continued Claims

SC Unemployed & UI ClaimsJan. 1987 – August 2009

1840

1860

1880

1900

1920

1940

1960

1980

2009M01 2009M04 2009M07 2009M10

SC Employment (HH survey)SC Employment (business survey)

1000

s

SC EmploymentJan. 2009 – August 2009

10

20

30

40

50

60

1970 1975 1980 1985 1990 1995 2000 2005

SC Exhaustion RateUS Exhaustion Rate

perc

ent

UI Exhaustion RateJune 1972 – August 2009

People are exhausting UI benefits at a record rate… this is why continued claims, unemployed, and unemployment rate have been falling.

2170000

2175000

2180000

2185000

2190000

2195000

2200000

2205000

2009M01 2009M04 2009M07 2009M10

SC Labor ForceJan. 2009 – August 2009

SC’s labor force fell by 28,000 between May and August 2009

10.0

10.5

11.0

11.5

12.0

12.5

13.0

2009M01 2009M04 2009M07 2009M10

Recalculated Unemployment RateOfficial Unemployment Rate

SC Unemployment Rate revisitedJan. 2009 – August 2009

12.6%

11.5%

Given the actual trends in employment, what if the state’s labor force had remained unchanged since May?

15000

20000

25000

30000

35000

40000

45000

50000

55000

90 92 94 96 98 00 02 04 06 08

mon

thly

initi

al c

laim

s

SC Initial Claims for UIJan. 2009 – August 2009

10000

20000

30000

40000

50000

60000

2

4

6

8

10

12

14

88 90 92 94 96 98 00 02 04 06 08

Initial ClaimsUnemployment Rate

mon

thly

cla

ims

percent

SC Initial Claims & UnemploymentJan. 2009 – August 2009

-8

-6

-4

-2

0

2

4

6

8

90 92 94 96 98 00 02 04 06 08 10

annu

aliz

ed %

cha

nge

U.S. Real GDP Growth1990Q1 – 2010Q4

2000 3.7%2001 0.8%2002 1.6%2003 2.5%2004 3.6%2005 2.9%2006 2.8%2007 2.0%2008 1.1%2009 -2.6%2010 1.5%

Headwinds AffectingConsumer Spending

160

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400

92 94 96 98 00 02 04 06 08

$bill

ions

, mon

thly

Job losses, flat incomes, household rebalancing translates into weak consumer spending

Aug. 2008 to Aug. 2009:

US Retail Sales down 5.6%

2000

4000

6000

8000

10000

12000

14000

90 92 94 96 98 00 02 04 06 08

$mill

ions

, mon

thly

S.C. Retail SalesJan. 1990 – July 2009

May-July 2008 to May-July 2009:

SC Retail Sales down 12.5%

A Few Key Sectors in South Carolina• June 2008 – June 2009: SC net loss of 92,700 jobs

– Manufacturing: -29,800– Leisure & Hospitality: -16,500– Retail Trade: -12,100– Construction: -10,900 (-24,400 since June 2007)

• These sectors ~ 40% of all jobs• These + Govt. ~ 60% of all jobs• From 2002-2007: SC Employment increased by roughly 155

thousand– Over 50% of the job growth came from construction, leisure &

hospitality, retail trade, and local government

-10

-5

0

5

10

15

20

25

40 45 50 55 60 65 70 75 80 85 90 95 00 05 10

annu

al %

cha

nge

SC Total Employment: Annual Job Growth1940Q1 – 2010Q4

2000 1.6%2001 -1.9%2002 -1.0%2003 0.2%2004 1.4%2005 1.8%2006 2.2%2007 2.0%2008 -0.9%2009 -4.3%2010 -1.7%

S.C. Total Employment Growth:Annual 1990 - 2010

-5

-4

-3

-2

-1

0

1

2

3

4

90 92 94 96 98 00 02 04 06 08 10

annu

al %

cha

nge

2000 1.6%2001 -1.9%2002 -1.0%2003 0.2%2004 1.4%2005 1.8%2006 2.2%2007 2.0%2008 -0.9%2009 -4.3%2010 -1.7%

2

4

6

8

10

12

14

16

1980 1985 1990 1995 2000 2005 2010

perc

ent

S.C. Unemployment Rate1976Q1 – 2010Q4

SC’s unemployment rate:

Expected to approach 15%, perhaps during Spring 2010

The roles of:-ongoing job losses-sluggish job growth-labor force growth

What about broader measures of unemployment?

160

200

240

280

320

360

400

440

1980 1985 1990 1995 2000 2005 2010

jobs

, 100

0sSC Manufacturing Employment

1970Q1 – 2010Q4

140,000 net job loss from2000 - 2010

The State of Economic Development in South Carolina

80000

90000

100000

110000

120000

130000

1994 1996 1998 2000 2002 2004 2006 2008

Gains Losses

quar

terly

jobs

(4-q

tr m

ovin

g av

erag

e)

SC Employment Dynamics1992Q3 – 2008Q3

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

1300

1400

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1600

1700

1800

1900

2000

2100

2200

1994 1996 1998 2000 2002 2004 2006 2008

Gains - ExpansionsGains - OpeningsLosses - ClosingsLosses - ContractingTotal Employment

quar

terly

jobs

(4-q

tr m

ovin

g av

erag

e)total jobs, 1000s

SC Employment Dynamics1992Q3 – 2008Q3

10000

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30000

40000

50000

60000

70000

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90000

100000

1300

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2200

1994 1996 1998 2000 2002 2004 2006 2008

Gains - ExpansionsGains - OpeningsLosses - ClosingsLosses - ContractingTotal Employment

quar

terly

jobs

(4-q

tr m

ovin

g av

erag

e)

total jobs, 1000s

SC Employment Dynamics1992Q3 – 2008Q3

How do we add jobs?

-Attract New Business

-Encourage Expansion-Prevent Closings-Prevent Contractions