Charleston Economy On the Rise

Bullish construction activity, new jobs and higher wages are expected to grow the Charleston region's economy in 2014, mirroring - and even surpassing - projections for South Carolina as a whole.

That was the message given in the University of South Carolina's annual economic outlook report, which was given Monday during the school's 33rd annual Economic Outlook Conference in Columbia.

Business school economists Douglas Woodward and Joseph Von Nessen are predicting job growth - the single best economic indicator - to increase by 1.7 percent in the Palmetto State during 2014. The two made the prediction barring major changes in the U.S. Federal Reserve's massive economic stimulus program.

"We've now recovered to the point that some areas of the state have achieved pre-recession employment levels," Von Nessen said. "Make no mistake, South Carolina's economy is expanding."

The annual forecast projects strong growth in some major industries, such as construction, financial services, retail, leisure and hospitality.

"South Carolinians are spending more this year, which implies that they are more confident in the long-term stability of their employment and that they have more disposable income to spend," Von Nessen said. "Both are positive indicators going into 2014."

Von Nessen said the state's economy is growing faster than it did before the Great Recession, which officially began in December 2007 and ended in June 2009.

"But because the economy fell so sharply during 2009-10, we are only now getting into a true expansion," he said. "The good news is that more South Carolinians are feeling the expansion."

Von Nessen added that Charleston is projected to do better than other parts of the state in the coming year.

"Charleston has been, over the last couple years, a leader in the post-recession economic recovery," Von Nessen said.

He added that the region's strengths are in home sales, construction and jobs growth.

Home sales, for example, have been a standout amid the state as a whole.

The S.C. Realtors Association recently reported the region of Charleston, Berkeley and Dorchester counties tallied 10,780 homes sold for a median price of $205,000 through the first 10 months of this year. That's the highest volume of sales for any region in the state and $48,000 higher than the average median price for homes sold in South Carolina, according to the data.

The strong sales have meant more jobs for the construction market, which has peppered the region with new homes projects, such as Carolina Bay in West Ashley and Carolina Park, which is off U.S. Highway 17 in the north end of Mount Pleasant.

Weeks ago, the Charleston New Homes Snapshot for 2013 from Carolina One Real Estate said permit activity is up 18 percent compared with the first eight months of 2012. More than 2,500 new home permits have been issued in that time, the report said.

Permit activity is one way experts gauge builder confidence in the new homes market.

Some local economists agreed with Monday's predictions by USC, adding that Charleston typically does better than state averages in part because of high-profile employers, such as Boeing, and a burgeoning tourism market.

"Somebody has to be slightly above the average and somebody has to be below," said College of Charleston economist Frank Hefner. "Traditionally, Greenville and our area are the leaders and you will look at these normal suspects to promote growth in the state."

Charleston and Greenville have been in lock-step in terms of jobs growth.

Last month's South Carolina unemployment report labeled October's its lowest point for jobless in the state since September 2008.

The rate was even smaller for Charleston metro region's rate, which was 6 percent for the month, tied with Greenville as the best performing among the four metro areas in the state, according to S.C. Department of Employment and Workforce.

"We are looking at jobs growth in the Lowcountry. It's got to its previous highs in 2012," Hefner said. "Here we are in 2013 and we are above the highs of the pre-recession."

Hefner added that the population growth in the Charleston region has slightly skewed the employment image of the region since there are still residents unemployed.

"It's not the previously unemployed locals getting the jobs and that's a problem across South Carolina," he said.

Von Nessen noted that wage growth has been relatively stagnant, despite the additional jobs.

"Too many South Carolinians are still working part time because not enough full-time work is available," he said.

The prediction comes on the heels of a Charleston Metro Chamber of Commerce-sponsored survey, which concluded many local firms expect to give roughly the same pay increase to employees next year as they did last year, which is 2 to 3 percent.

Steve Slifer, a Charleston-based economist and owner of NumberNomics, said Monday that wages are poised for grow next year due to employers forced to lure qualified workers.

"The unemployment rate has come down a long ways and you can no longer just cherry-pick who you want, you have to look harder," he said. "It will be to the point where firms looking to get who they want will have to push up wages."

Slifer added that the younger segment could be tapped more often to fill full-time posts.

"As the unemployment rate nationally and locally goes down, firms will have to look a bit harder to fit the bill for what they're looking for," he said. "They will look at our youth."

Slifer said the job seekers between ages 16 and 24 years old have double-digit unemployment.

"I would bet it would be a bit easier for these younger people to get jobs going forward because this is an untapped source," he said.

The only major threat to the 2014 forecast is an abrupt change in monetary policy, he said.

If the Federal Reserve pulls back on its bond-buying program, interest rates could rise, negatively impacting housing and the stock market.

According to a November survey by the National Association of Business Economists, nine out of 10 economists believe the Fed's stimulus program - in place since December 2012 - will wind down next year. The Federal Reserve has been buying $85 billion in bonds each month in an effort to keep interest rates low and stimulate the economy.

The Associated Press contributed to this report. Post and Courier Economists project Charleston-area jobs, income growth in 2014    Tyrone Richardson