S.C. Economic Outlook Conference
The University of South Carolina will present its 34th annual Economic Outlook Conference beginning at 1 p.m. Tuesday at the Darla Moore School of Business, 1014 Greene St. in Columbia.
This year’s conference will include a presentation by economist Douglas Woodward titled “The Economic Impact of BMW: 20 years of Economic Development in South Carolina,” as well as state, regional and national economic forecasts.
The conference also will feature a keynote address from Sue Helper, chief economist of the U.S. Department of Commerce, on the current and future state of the manufacturing industry in the United States and its implications for South Carolina.
David Crowe, chief economist of the National Association of Home Builders, will address the lackluster growth in U.S. housing markets to date and the role housing will play in economic growth going forward.
Registration is $75. Call (803) 777-3176 for more information.
The Charleston region will continue to see growth in manufacturing, jobs, retail sales, tourism spending and construction during the upcoming year, an economist at the University of South Carolina said, but a slowdown in Europe and an unlikely culprit – free-falling oil prices – could negatively impact two of this area’s largest economic drivers: The Port of Charleston and Boeing.
The Charleston area’s economy picked up speed at a 2.1 percent clip in 2014 – matching the state average – and should repeat that performance in 2015, according to the university’s annual economic forecast released Wednesday.
This area’s economic growth has averaged 2.5 percent over the past five years.
“If you liked 2014, then you’ll like 2015,” said Joseph Von Nessen, an economist at the university’s Darla Moore School of Business. “South Carolina’s economy hit its stride this year, and we expect that trend to continue.”
A stable economy, rising home values and more jobs will mean more money in consumers’ pockets for the new year.
“Households are carrying less debt and their net worth has increased,” Von Nessen said. “This means that consumers have more disposable income, which is increasing demand for tourism-related industries, especially in South Carolina’s coastal regions.”
Consumers also have benefited from falling fuel prices, which Von Nessen said “is effectively a tax cut” for anyone who drives a vehicle.
Charleston tourism typically gets a boost from lower fuel prices because less money spent on gas means more money spent in area restaurants and attractions.
About 80 percent of visitors travel to South Carolina by vehicle, so gas prices are a major factor for the overall health of the state’s tourism industry, according to the state Department of Parks, Recreation and Tourism.
“2013 was a record year for tourism in the state, 2014 will surpass that, and lower gas prices were a big part of that,” said Duane Parrish, director of the state tourism agency. “If gas prices continue to go down and even below $2 a gallon like they’re predicting now, I think 2015 will be another record year.”
The lower cost of oil isn’t always good news.
If fuel prices fall too far, analysts worry they could start to have an impact on Boeing’s sales of fuel-efficient commercial planes like the Dreamliner, which the company makes at its North Charleston campus and in Everett, Wash.
Boeing’s new generation of commercial planes is as much as 24 percent more fuel-efficient than some of the older planes airlines currently have in their fleets. If oil is super cheap, those airlines could decide to hold off on buying new Dreamliners because the fuel savings might not compensate for the capital outlay. Boeing 787-9s have a list price of $257 million, although airlines typically negotiate discounts.
Jim McNerney, Boeing’s chairman and chief executive officer, said last month that oil prices would have to fall much lower than $70 per barrel before the company would feel any impact. McNerney stopped short of pinpointing a price where the impact would be noticed.
At least one U.S. aerospace analyst set the price at $60 per barrel.
“If we’re talking $60, that’s a problem,” Richard Aboulafia of The Teal Group in Fairfax, Va., told The Globe and Mail newspaper in Canada. “No one really knows what the tipping point is.”
Brent crude on Wednesday touched a new five-year low of $63.56 per barrel before closing at $64.24 a barrel. U.S. crude closed at $60.94.
Von Nessen said “it’s hard to speculate for a specific (Boeing) deal” because so many other factors can come into play when an airline decides to update its fleet. He said lower energy costs “generally increase demand across the board” and that should lead to overall “robust growth” in the Charleston area’s manufacturing sector.
More predictable is the impact Europe’s economy will have on Charleston’s port. There was a 12.7 percent increase in exports from the Charleston port to European nations in 2013 compared to the previous year. That equals 216,022 twenty-foot-long cargo boxes of American products sent overseas.
“As a percentage of total economic activity, South Carolina exports more goods and services to Europe than most other states,” Von Nessen said. “This means that we are more vulnerable to a European recession than other parts of the country.”
Projected mild to no growth in the Eurozone would mean less demand for U.S. merchandise, thereby fewer exports moving through Charleston.
“We’re not expecting a major slowdown – we don’t think it’s a looming threat,” Von Nessen said. “But if a recession were to happen in Europe, that would knock us back a bit.”
Statewide, more people joined the labor force this past year, causing a slight increase in the unemployment rate in recent months.
“This increase in the labor force is positive because it shows that South Carolinians are more optimistic and are seeing more opportunities for work,” Von Nessen said, adding that the unemployment rate should decline to 6.3 percent over the next 12 months.
Growth in real income – the difference between a wage increase and inflation – is expected to remain mild, with a growth rate of 1.8 percent projected for 2015. Real income across most regions of South Carolina has been consistently growing at a rate below the national average.
Abigail Darlington contributed to this report. Reach David Wren at 937-5550 or on Twitter at @David_Wren_
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