Published: November 25, 2020; Updated: November 25, 2020
With a current unemployment rate of 4.2 percent – less than two percentage points away from its pre-pandemic low of 2.5 percent – South Carolina’s economy has largely recovered from the recession induced by the 2020 pandemic.
- The strong recovery across the state was highlighted by University of South Carolina economists Douglas Woodward and Joseph Von Nessen during the 1940sº Annual Economic Outlook Series presented by Darla Moore School of Business on Monday (November 30).
What they are saying: “It is a story of two recoveries. South Carolina’s economy has returned strong and is almost completely recovered in many areas, ”says Von Nessen. “But there are two main exceptions – the leisure and hospitality industry and small businesses that offer in-person services.
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Economists warned that a COVID-19 vaccine will be needed to return in full force in all sectors by 2021.
- Leisure and hospitality sector employment levels still fell 17% compared to pre-pandemic levels and are still at risk of further declines in the short term.
- Employment in all other sectors in South Carolina, by contrast, it fell by only 2%.
Between the lines: “Until individuals are more comfortable traveling, staying in hotels and spending time in restaurants, bars and other recreational facilities, this dichotomy will persist,” says Von Nessen. “The vaccine is still our best bet for restoring consumer confidence.”
- More than 130,000 South Carolinaians – many of whom worked in the service sector – are still unemployed and receiving benefits through the CARES Act.
- These workers can be cut when federal support programs expire on December 31, which is before most health officials believe a vaccine will be widely distributed.
What is the next: With a projected increase in COVID-19 cases likely during the upcoming holiday season, following the expiration of funding under the CARES Act, the pace of South Carolina’s economic recovery is unlikely to improve before next year.
- Among the long-term changes The pandemic that is likely to bring to South Carolina’s economy is the shift towards remote work, which is encouraging workers in densely populated urban areas to consider moving to regions with relatively lower living costs and larger, more affordable homes. South Carolina has seen a significant increase in the number of people moving from other states.
- “This will be an advantage for companies as the economy recovers in 2021 and 2022, ”says Woodward, director of the Moore School’s Research Division. “The increase in population growth in the Southeast means a greater demand for goods and services in this dynamic region of the country.”
- Another key factor South Carolina’s long-term economic growth will be its continued success in export-oriented manufacturing.
- This recovery is unique because it is being driven by biological factors – the pandemic and the development of a vaccine – rather than by economic factors, says Von Nessen. “We have made good progress so far, but we are not yet out of danger.”
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Topics: faculty, research, economic involvement, Darla Moore School of Business