Economists predict SC’s economy to fully recover from pandemic by 2022
CHARLESTON, S.C. (WCSC) - South Carolina’s economy is expected to be fully recovered from the COVID-19 pandemic next year.
That’s according to the state’s 2022 Economic Outlook report from the University of South Carolina’s Darla Moore School of Business, released Tuesday.
Economists said South Carolina is one of just 11 states where the size of the labor force has rebounded back to pre-pandemic levels and that the state’s overall economic recovery has been better than most other states.
“Part of that is due to policy. Our shutdown was more targeted, and it was more limited, and obviously the longer a business has to stay shut down, the less likely it’s going to be able to recover,” University of South Carolina Research Economist Joey Von Nessen said.
According to Von Nessen, the nature of South Carolina’s economy also played a role, as Americans, aided by government stimulus, have been spending more money on goods, boosting the state’s manufacturing and growing logistics sectors.
He also said the state’s tourism, leisure, and hospitality industry is poised for recovery after struggling for much of last year.
“Tourism has had one of its best years in 2021,” Von Nessen said. “We see that in terms of the data in terms of sales, in terms of lodging, in terms of a number of different metrics.”
Even with more restrictions placed back on international travel, some as recent as this week, economists said that pushes more people who want to travel to do so within the US.
“That bodes well for South Carolina’s tourism this year, as long as we don’t get another major outbreak that would shut down the tourism industry, which doesn’t look like this is happening with the current variant that’s out there,” UofSC Economics Professor Doug Woodward said.
But they added the state’s ongoing labor shortage will likely continue to challenge South Carolina’s economy heading into the next year.
Even as its population grows at a faster rate than most other states, migration data shows the majority of people moving to South Carolina are retirement age and likely will not be filling those open jobs.
“There’s a major mismatch between supply and demand in terms of what we’re seeing right now. So it’s not enough for businesses to recapture the employees that they lost during the pandemic. They need those workers, but they need more. They need more workers because of the higher levels of demand,” Von Nessen said.
They also expect inflation will continue to challenge South Carolina in 2022 as well, reporting for about 40% of the state’s workers, their wages have not risen enough to keep up with increased costs.
Woodward said the country might experience a “wage-price spiral” as it did in the 1970s.
“When inflation starts going up like it is, 5%, 6%, workers begin to realize that’s when it really hurts,” Woodward said. “They really see that their real standard of living is eroding as a result of inflation and are going to demand more if they’re going to go back to work, and there is demand for labor, and then there’s — businesses are just going to pass that along in terms of prices. And then people need higher wages, and we get into this spiral, and it takes a really contractionary Federal Reserve, which we haven’t seen in a long time, going back to [1979-1987 Federal Reserve Chair Paul] Volcker.”
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