, Division of Research

2010 Outlook for theSouth Carolina Economy

Recovery or Relapse?

Doug WoodwardDivision of Research

2010 U.S. Outlook

2009 was year of government activism. Massive fiscal stimulus. Low interest rates. Direct monetary

intervention in credit (mortgage) markets.

There will be a recovery. But slow growth for private

sector activity in 2010. Relapse?

South Carolina’s Economic Prospects in 2010

Boeing is big.

Leading economic indicators look good.

12

01

30

14

01

50

perc

enta

ge

2000m1 2002m1 2004m1 2006m1 2008m1 2010m1

Uncertainty

Dysfunctional financial system Leverage and debt More surprises?

From excessive credit to no credit Despite bailouts

Choking private expansion

A Lasting Recovery … No Relapse

No more financial shocks

Virtuous cycle of U.S. GDP

growthSpendingInvestmentJobs

Dr. Doom: No Lasting Recovery

Predicted recession Possibility of a W-Shape rather

than V- or U-shaped. Unemployment rates in the mid-

double digits 15% or above unemployment rate,

with and multi-year stagnation in economic activity.

http://www.rgemonitor.com/

V-Shape?

Keys to a Sustained Recovery

Monetary and fiscal stimulus will fade

Consumer spending Sales

Private investment Risk taking

S.C. Real Retail Sales12-Month Moving Average4

50

05

00

05

50

06

00

0M

illio

ns o

f D

olla

rs

2000m1 2002m1 2004m1 2006m1 2008m1 2010m1

South Carolina Metro Areas (MSAs):Real Retail Sales

07/08 08/09(up to Oct)  

7.3% -14.3% Anderson

0.8% -14.9% Charleston-N Charleston

-0.6% -11.9% Columbia

5.3% -11.6% Florence

2.6% -15.1% Greenville

-6.0% -13.3% Myrtle Beach-Conway-N Myrtle Beach

5.6% -4.1% Spartanburg

-3.4% -12.3% Sumter

Business Investment

Source: U.S. Department of Commerce: Census Bureau.

S.C. Growth of Single FamilyHousing Permits

-40

-20

02

04

0%

ch

an

ge

2000q2 2001q4 2003q2 2004q4 2006q2 2007q4 2009q2

Monetary Stimulus Needed Trillions from U.S. Treasury and Fed Liquidity

Low, low rates Extra monetary easing by Fed

Credit crunch continues A solvency problem?

Fiscal Stimulus $800 billion, with half

still unspent Shovel-ready

projects Infrastructure Restoration of state

cuts Short-term: Multiplier

effect Long-term: Comb-

over effect

Forecast for South Carolina’s Economy in 2010

Outlook for 2010:Personal Income

-20

24

6

2008q1 2008q3 2009q1 2009q3 2010q1 2010q3quarter

Historical Forecast

Outlook for 2010:Total Employment

-6-4

-20

2

2008q1 2008q3 2009q1 2009q3 2010q1 2010q3quarter

Historical Forecast

Employment Growth by Sectors of Activity 2008/2009

Difference %Change  

1,100 1.1% Government

-26,600 -11.2% Manufacturing

-6,700 -2.9% Retail Trade

4,400 2.0% Professional & Business Services

-8,000 -3.8% Leisure & Hospitality Services

-1,000 -0.5% Education and Health Services

-16,900 -14.9% Construction

-3,200 -3.0% Financial Activities

South Carolina Metros (MSAs):Total Nonfarm Employment

Oct 08 Oct 09 %Change  

62.8 61.4 -2.2% Anderson

300.8 292.9 -2.6% Charleston-N Charleston

364.2 361.2 -0.8% Columbia

87.9 87.2 -0.8% Florence

320.1 309.5 -3.3% Greenville-Mauldin-Easley

120.7 116.1 -3.8% Myrtle Beach-Conway-NMB

129.0 124.7 -3.3% Spartanburg

Outlook for 2010:Unemployment Rate

05

10

15

2008q1 2008q3 2009q1 2009q3 2010q1 2010q3quarter

Historical Forecast

Conclusion Fragile recovery. Distress in the financial system. Running out of tricks. Weak job market. Slow growth in income. Relapse possible.

Additional information available at:

http://mooreschool.sc.edu/moore/research/

Thank you!