South Carolina's coast has some good markets for homebuilding: Charleston with its historic downtown and attractive beach communities, Hilton Head, Beaufort, and other coastal towns are prime areas for coastal living. And like much of the state, those markets are heavily influenced by military spending, and by large populations of military retirees.
The Federal Reserve Bank of Richmond, Va., publishes a monthly "Snapshot" report on the South Carolina economy, as well as for other states in the region. November's issue points to encouraging signs in the state's housing markets: "Residential real estate conditions in South Carolina continued to improve in recent months. The number of residential permits issued in the state increased 1.3 percent in September and 46.8 percent since September 2011. The number of housing starts also increased both in the month (24.9 percent) and over the year (39.1 percent). Meanwhile, data from CoreLogic Information Solutions suggested improved housing conditions in South Carolina as home values appreciated 0.9 percent in August and 5.0 percent from one year ago. At the metro level, home prices rose in most of the state's metro areas in both the month and the year."
And the state's unemployment rate dropped half a percent in September, the Fed noted — the sharpest monthly decline in any of the 50 states. Still, South Carolina's unemployment rate lags above the rest of the nation's as it has since the early 2000s (after tending to stay below the national rate through most of the 1990s). The recovery in South Carolina, as in other states, is fragile — and that's one reason state officials are worried about the fiscal discussions in Washington.
South Carolina's employment picture (top) and housing economy (above) are showing encouraging signs of a rebound, the Federal Reserve Bank of Richmond reports. But local leaders worry that the fragile recovery could still be knocked off track if automatic cuts in defense spending take effect.
The so-called "fiscal cliff" — cuts in Federal spending, along with a reversion to Clinton-era tax rates, which will take effect automatically if Congress and the President can't agree on a different solution — could hit South Carolina hard. That's because of the importance of military spending in the state's economy — spending that would drop suddenly if the automatic cuts happen.
There are 56,000 military retirees in South Carolina, a recent South Carolina Chamber of Commerce study reported — making the state eighth in the nation as an ex-military retirement home. And that's on top of a big active-duty military presence, reports TheState.com ("Military retirees pump millions into S.C. economy," by Jeff Wilkinson). When you add up the retirees, 900 defense contracting firms, and eight major bases — including Joint Base Charleston, Shaw Air Force Base in Sumter, and the Marine Corps Air Station and Recruit Depot in the Beaufort-Parris Island area, says the report, "military operations and activities represent more than 138,000 jobs in the state generating $7.2 billion in annual payroll."
Charleston Mayor Joe Riley traveled to Washington this month to carry his concerns about the "fiscal cliff" to the Conference of Mayors and to national policymakers, according to a report by Charleston TV station WCBD ("Mayor Riley explains "fiscal cliff" impact to Charleston in DC," by Michelle Sobel). Said Riley: "Massive defense cuts would cause substantial jobs losses and could cripple our economic recovery."