Chamber’s 2011 forecast calls for stability, some growth
By Ashley Fletcher Frampton
Published March 30, 2011
This year and next, the Charleston economy is expected to continue on the path of stability and strengthening that began in 2010, according to the annual forecast from the Charleston Metro Chamber of Commerce.
“As the region enters 2012, the economy should be well on its way to measurable strength and expansion in every sector,” said the report on the forecast, which was presented today at the Charleston Area Convention Center.
The chamber, working with the College of Charleston’s Office of Economic Analysis, presents an economic forecast each spring that is based on historical data and information about new and emerging trends.
Frank Hefner, director of the Office of Economic Analysis, said market volatility over the past few years continues to make forecasting difficult. He said it would be easier to predict the next 20 years than the next two.
But, Hefner said, “We think the bottom has been reached.”
The region saw growth in several sectors in 2010, including port volume, hotel performance and retail sales. In some cases, the growth was much higher than the chamber predicted last year.
For example, last spring the chamber forecast 2% growth in volume of 20-foot equivalent units, or TEUs, at the Port of Charleston. The port finished the year with 15.5% growth.
This year’s forecast calls for a net gain of 3,000 jobs in the region, leading to an annual unemployment rate of 8.8% in 2011. Next year, an additional 4,400 net jobs are expected, lowering the unemployment rate further to 8.4%.
The annual unemployment rate for 2010 was 9.3%, down from 9.7% the year before.
Hefner said the region’s job market no longer relies on a few industries like tourism, real estate and construction.
Expected job growth in the Charleston area, particularly industrial growth that brings new people to the region, will also lend stability to the real estate market, Hefner said.
The outlook calls for total home sales to increase 1% in 2011 and 1.7% in 2012. Average sales price will rise 0.9% this year and 3% the next year, the forecast said.
Those slight gains are smaller than the region saw from 2009 to 2010.
Hefner said the residential real estate market will not see a true recovery until government intervention ends and excess inventory is absorbed.
New home construction will remain flat, and that will limit growth in local retail sales, said Mary Graham, the chamber’s senior vice president for public policy and regional advancement.
Retail sales were a bright spot in 2010, increasing 12.9% after falling by nearly the same amount in 2009. The forecast calls for 5.8% growth in 2011, for a total of $19.4 billion in retail sales. In 2011, an additional 1.7% gain is forecast.
Port volume is expected to grow by 4.5% this year and 5.5% next year.
Passenger traffic at Charleston International Airport, which fell 7.7% in 2010, is expected to surge this year and then level out next year. Driving the forecast for 21.4% growth this year is the arrival this month of low-cost carrier Southwest Airlines. Next year, passenger traffic is forecast to grow an additional 2.6%.
Southwest Airlines and increased cruise business at the Port of Charleston are expected to further boost the region’s tourism industry, which showed strength in 2010. The PGA Championship at Kiawah Island Golf Resort in 2012 will be another positive factor for tourism.
During 2010, occupancy at Charleston County hotels — an indicator of tourism activity — averaged 68.3%. This year and next, the average annual occupancy rate is forecast to be about 70%.
Graham said another highlight for the region this year is the completion of the Boeing Co.’s 787 final assembly facility in North Charleston.
“The world will be watching Charleston,” she said about the facility’s starting operations.
Hefner said two recent international events — the United States’ military involvement in Libya and the earthquake, tsunami and nuclear disaster in Japan — could have a negative impact on economic recovery, but it’s too early to know.