The 2013 growth rate of the gross domestic product shows only small increases for most states east of the Mississippi, including South Carolina’s slight 1.2 percent rise throughout the year.
Clemson economist Bruce Yandle attributes the regional imbalance highlighted in the U.S. Department of Commerce’s report to the recession’s negative impact on Eastern states with economies that rely heavily on manufacturing.
The state GDP growth is decidedly stronger in the West, Yandle said. Western states have oil, coal, gas, hard grain and, on average, higher educational attainment than the East, he said. In addition, America’s manufacturing muscle is located in the eastern states, and “the Great Recession was hard on manufacturing.”
Although recent unemployment reports show statewide improvement, dropping 1 percent below the national average in April to 5.3 percent, Yandle said South Carolina’s 2013 growth in real GDP could be partially explained by weaker growth in the number of people employed in the state.
“Growth in real GDP is driven mainly by employment growth,” he said. Employment improved less than 1 percent in 2013 after growing 1.7 percent in both 2011 and 2012.
The state unemployment rate is determined by the number of people seeking work as a share of the labor force, Yandle said.
In 2013, the state labor force – defined as those working or looking for work – was smaller than in 2012 or 2011, he said. As a result, the unemployment rate fell, but the real GDP growth fell as well.
The state’s labor force participation rate stood firmly at just 57.9 percent in both March and April, nearly a full percentage point lower than the same time last year, according to the South Carolina Department of Employment and Workforce.
The GDP report placed the Palmetto State behind neighboring states Georgia and North Carolina and 0.6 percent behind the national rate.
Yandle said South Carolina’s economy recovered earlier than its neighbors after the recession, with 3.1 percent growth in 2011 and 1.5 percent in 2012.
“Our neighboring states were just getting started in 2011 and are now catching up,” he said. “We must remember that this is for newly produced goods and services, and a large part of South Carolina’s population is retired and receiving transfer income, not income based on newly produced goods and services.”
In a press conference held Wednesday at the Governor’s Mansion, Gov. Nikki Haley said the goal is to keep the economy moving.
“There’s a reason why they’re naming us the beast of the Southeast,” she said. “The economy is turning, and it’s a lot different than it was in 2011, and my hope is that 2017-2018 is a lot different than it is in 2014.”
