1. , Division of Research 2010 Outlook for the South Carolina Economy Recovery or Relapse? Doug Woodward Division of Research

3. 2010 U.S. Outlook 2009 was year of government activism. Massive fiscal stimulus. Low interest rates. Direct monetary intervention in credit (mortgage) markets. There will be a recovery. But slow growth for private sector activity in 2010. Relapse?

4. South Carolina’s Economic Prospects in 2010 Boeing is big. Leading economic indicators look good.

5. Uncertainty Dysfunctional financial system Leverage and debt More surprises? From excessive credit to no credit Despite bailouts Choking private expansion

6. A Lasting Recovery … No Relapse No more financial shocks Virtuous cycle of U.S. GDP growth Spending Investment Jobs

7. Dr. Doom: No Lasting Recovery Predicted recession Possibility of a W-Shape rather than V- or U-shaped. Unemployment rates in the mid- double digits 15% or above unemployment rate, with and multi-year stagnation in economic activity. http://www.rgemonitor.com/

8. V-Shape?

9. Keys to a Sustained Recovery  Monetary and fiscal stimulus will fade  Consumer spending  Sales  Private investment  Risk taking

11. S.C. Real Retail Sales‏ 12-Month Moving Average

12. South Carolina Metro Areas (MSAs): Real Retail Sales 07/0808/09 (up to Oct)‏ 7.3%-14.3% Anderson 0.8%-14.9% Charleston-N Charleston -0.6%-11.9% Columbia 5.3%-11.6% Florence 2.6%-15.1% Greenville -6.0%-13.3% Myrtle Beach-Conway-N Myrtle Beach 5.6%-4.1% Spartanburg -3.4%-12.3% Sumter

13. Business Investment

15. Source: U.S. Department of Commerce: Census Bureau.

16. S.C. Growth of Single Family Housing Permits

18. Monetary Stimulus Needed  Trillions from U.S. Treasury and Fed  Liquidity  Low, low rates  Extra monetary easing by Fed  Credit crunch continues  A solvency problem?

19. Fiscal Stimulus $800 billion, with half still unspent Shovel-ready projects Infrastructure Restoration of state cuts Short-term: Multiplier effect Long-term: Comb- over effect

21. Forecast for South Carolina’s Economy in 2010

22. Outlook for 2010: Personal Income

23. Outlook for 2010: Total Employment

24. Employment Growth by Sectors of Activity 2008/2009 Difference%Change 1,1001.1%Government -26,600-11.2%Manufacturing -6,700-2.9%Retail Trade 4,4002.0%Professional & Business Services -8,000-3.8%Leisure & Hospitality Services -1,000-0.5%Education and Health Services -16,900-14.9%Construction -3,200-3.0%Financial Activities

25. South Carolina Metros (MSAs): Total Nonfarm Employment Oct 08Oct 09%Change 62.861.4-2.2% Anderson 300.8292.9-2.6% Charleston-N Charleston 364.2361.2-0.8% Columbia 87.987.2-0.8% Florence 320.1309.5-3.3% Greenville-Mauldin-Easley 120.7116.1-3.8% Myrtle Beach-Conway-NMB 129.0124.7-3.3% Spartanburg

26. South Carolina MSAs: Unemployment Rate Oct 08Oct 09Change 7.812.5+4.7 Anderson 6.59.7+3.2 Charleston-N Charleston 6.99.4+2.5 Columbia 8.712.1+3.4 Florence 6.810.4+3.6 Greenville-Mauldin-Easley 8.710.9+2.2 Myrtle Beach-Conway-N Myrtle Beach 7.912.2+4.3 Spartanburg 9.913.9+4.0 Sumter

27. Outlook for 2010: Unemployment Rate

28. Conclusion Fragile recovery. Distress in the financial system. Running out of tricks. Weak job market. Slow growth in income. Relapse possible.

30. Additional information available at: http://mooreschool.sc.edu/moore/research/ Thank you!