With high interest rates tightening lending and two major military conflicts in sensitive parts of the world threatening international stability, the global economic outlook going into next year is marked with uncertainty.
That uncertainty will affect the Upstate and state economies, but local banking leaders are cautiously optimistic about the region’s overall economic outlook.
One of the reasons for this optimism is the nature of what has been driving economic and population growth in the Palmetto State, and the Upstate in particular. The comparatively lower cost of living and high quality-of-life amenities in the region remain largely unchanged, according to David Lominack, South Carolina market president for TD Bank.
“Clearly there are some larger forces at play, but in terms of our region I feel very bullish” about the economic prospects.” -South Carolina market president for TD Bank
He said the trend of population movement into the Southeast from other parts of the country shows no sign of abating anytime soon.
With the Greenville-Spartanburg area’s central location between the major hubs of Atlanta and Charlotte combined with the area’s natural beauty, the influx will continue to infuse the area with new talent and capital, he said.
“Clearly there are some larger forces at play, but in terms of our region I feel very bullish” about the economic prospects, Lominack said.
South Carolina’s reputation as a growing manufacturing powerhouse underpins much of that economic and population growth, according to Lynn Harton, chairman and CEO of Greenville-based United Community.
“Population growth covers a lot of evils economically,” he said.
Another factor mitigating the risks of an economic downturn stems from the 2008 recession and the lessons companies learned as a result, Harton said. Many companies learned to adapt quickly and act with financial caution when the economy shows signs of trouble.
“The recession is not so far away that we can’t remember it,” he said.
He and Lominack also point to South Carolina’s history in recent years of strong public-private collaborations, which lead to increased economic development and an enduring perception among businesses that the state is a good place to set up shop.
Warning signs
While the region’s economic prospects in the next few years appear solid, Lominack and Harton warned of challenges ahead.
Lominack said maintaining and expanding a skilled workforce will be critical to the state’s ongoing success. While continued in-migration is likely to aid in that goal, local and state leaders must continue to prioritize education and training programs, he added.
Harton said in the nearer term there’s also a chance the Federal Reserve’s actions in hiking interest rates and tightening the money supply might overcorrect problems they’re meant to address and actually bring on a recession.
“Clearly the Fed is desirous of an economic slowdown, and I think they have set us all up to get one,” he said.
He added there are some indications the Fed may reduce interest rates next year to produce the “soft landing” of a controlled slowing of the U.S. economy, but the timing will be key.
“I’m not predicting some big crash, by any means…With all that said, banks are coming into this with better balance sheets than the last recession.” – Lynn Harton, Chairman and CEO of United Community
“My fear is they hold on too long,” Harton said.
Tied to that prospect and of growing concern in the Upstate is the increasing cost of housing, Lominack said.
“Affordability is something we all need to pay attention to,” he said.
He and Harton said as the region grows and absorbs more people, the challenge will be to expand all the infrastructure needed to serve that growth while maintaining the quality of life underpinning people’s desire to live and work here.
Harton said even though those challenges are substantial, they’re better than the alternative.
“They’re a lot more palatable than the problems no growth brings,” he said.
