November 6, 2012 11:01:09 AM
JACKSON -- Mississippi's economy is forecast to grow slowly again in 2013, after eking out just barely positive growth in 2012.
State economists predict economic output will expand 1.6 percent next year. That's likely to be only enough growth to drag the state's unemployment rate to 8.9 percent from the 9.2 percent it has averaged so far this year.
Marianne Hill, an economist for Mississippi's College Board, says the state's reliance on low-skill jobs and federal money means its economy is growing more slowly than other parts of the nation.
For 2012, Hill predicts the state's output will grow, but only by 0.4 percent, compared to 2.1 percent growth nationwide. The faster 2013 growth rate is also expected to trail a national growth rate of 1.8 percent.
"Apparently, our industries are not the ones growing as rapidly as nationally," Hill said.
She notes that the state's professional and business service sector is lagging, and that the number of small businesses in Mississippi has fallen over the last decade. Fewer new firms are opening in the state than nationwide, leading Hill to question whether entrepreneurs can borrow money.
"We are noted for having a conservative banking community, but that means firms may have trouble getting access to capital," Hill said.
The worst drag on the economy this year will likely be construction, which is expected to shrink 4.8 percent. Also expected to fall, but at smaller rates, are the financial, leisure and hospitality, government and nondurable goods manufacturing sectors.
All those are expected to turn positive in 2013, with durable goods manufacturing and agriculture continuing to lead the way in growth. There is faster growth on the horizon in 2014, 2015 and 2016, with Mississippi's economy expected to grow by 2.4 percent or more in each of those years.
A drop in payroll employment during parts of 2012 led economists to say Mississippi had dipped back into recession. Payrolls have fallen every year since 2007, and Hill predicts payrolls will end 2012 basically flat, before growing by 1 percent in 2013.
"There's some improvement next year because it looks like construction is coming back," she said. "Building permits are improving."
There are also signs that the number of independent contractors is increasing in the state, a measure that's not captured by the payroll survey. The state unemployment rate is expected to fall slowly to 7.2 percent by 2017.
Despite the poor performance this year, per capita income in Mississippi is expected to expand by 2.5 percent. Hill said people who have jobs are doing pretty well, as bosses try to load more work on existing employees. But they're reluctant to hire new workers.
The relative prosperity of those who are employed has helped drive increases in state tax revenues, although that positive trend has wobbled in recent months
Some others see more positive signs. A survey of business owners and managers along the Mississippi coast shows that they expect a modestly improving economy in the state's second-largest urban region. The Gulf Coast Business Council survey showed an improvement in business confidence since July. After four months of recession, the Federal Reserve Bank of Philadelphia's calculations showed economic growth for Mississippi in August and September. The bank's index of leading economic indicators, which predicts growth in the next six months, showed sharp acceleration in Mississippi in September. The latest month's output predicts Mississippi will grow faster than the nation over the next half-year.