Latest State Economic Report Out
JACKSON, Miss. — The Mississippi Economic Outlook, first quarter 2013 edition, is now available online at www.mississippi.edu/URC. Published by the Center for Policy Research and Planning of the Institutions of Higher Learning (IHL), the Outlook presents the state economic forecast, including detailed employment forecasts by sector. Regional, national and international developments impacting the state economy are examined.
Recent Developments. Mississippi was one of only four states experiencing a decline in payroll employment in 2012, based on data through November. Positive job creation is expected in 2013. The pace, however, will be slower than predicted in our forecast last quarter, due to the negative impact of the 2% increase in the Social Security payroll tax. The updated state forecast predicts an increase in gross state product of 1.4% in 2013, down 0.2% from the previous forecast. The revised rate of employment growth is 0.8% and of personal income growth, 2%. These downward adjustments have occurred despite improvements in several economic indicators.
There are some bright spots in recent numbers. Both the leading and coincident economic indicators for the state were higher in the third quarter of 2012 than in the previous quarter, housing starts and permits rose, and the growth rates of key indicators including tax revenue collections, retail sales and personal income were positive. Inflation remains low and the economy is generating significant forward momentum.
Employment. Health care & social assistance, durables manufacturing, and transportation & utilities were the leading job creators in 2012 and will also be at the forefront of job creation in 2013. Each maintained employment growth of over 2.0%. On the other hand, construction employment was down (-6.3%) and business & professional services also fell (-1.8%).
While the drop in construction employment was due to cyclical factors, the fall in business & professional services is not as easily explained. The underperformance of scientific, professional & technical services (a key subsector of business & professional services) is of particular concern: nationally, employment in this sector rose 3% (November 2012 over November 2011), but in Mississippi employment fell 4.2%, continuing a longer-term trend. The drop indicates either a lack of demand for these services here or a shift of demand from Mississippi firms to firms outside the state. The services provided by this critical subsector include computer systems design, marketing, management consulting, engineering, accounting and research – all services that expand along with a growing economy.
“The economic landscape in the nation has changed; services are increasingly offered to a nationwide market via new communication and information technologies. Job creation in the future will depend more than ever on the ability of Mississippi-owned firms to market their goods and services outside the state”, said Senior Economist Marianne Hill. A policy brief on expanding the capacity of locally-owned firms will soon be published by the University Research Center.
Forecast Details. The Mississippi forecast is for slowly improving economic growth, after a slow start to 2013 as the 2% increase in the payroll tax hits. Employment growth will pick up mid-year, led by healthcare and manufacturing. There are signs of a turn-around in housing and construction employment is expected to pick up steam by 2014. The state is forecast to regain 2007 employment levels by 2018. The recovery will peak in 2015 at a real growth rate of output of 2.7%, with employment growth of 1.3%. The unemployment rate will gradually decline, falling from an average of 9.0% in 2012 to 7.2% by 2017.
The debt ceiling debate, the recession in the Eurozone, and the slow growth of the world economy are sources of risk to this forecast. The probability of recession remains at about 20%.
The full text of the Mississippi Economic Outlook is available at www.mississippi.edu/URC.