Even though Mississippi was already experiencing a recession prior to Sept. 11, early signs of recovery were emerging. The attacks clearly postponed that recovery, but the impact has not significantly deepened the state’s financial troubles, say state economists.
“The Mississippi coincident and leading economic indicators increased in October, suggesting the impact of the Sept. 11 terrorist attack on the Mississippi economy may be less than commonly feared,” said Darrin Webb, Ph.D., of the Mississippi Institutions of Higher Learning Center for Policy Research and Planning. “The slight up-tick in the indices gives encouragement to the much anticipated 2002 recovery.”
The Mississippi index of coincident indicators rose to 105.3 in October, up 0.3% from the revised September level, but down 1.6% from the October 2000 level. The October increase is only the fourth in the previous 13 months. The U.S. index declined slightly in October. Both components of the state index increased in October, Webb said.
The Mississippi index of leading economic indicators rose a modest 0.2% in October to 96.7, marking the fifth increase in the previous 12 months. Two of the five components of the state index contributed to the increase. The national index also rose modestly. The October 2001 index was 3.5% below the October 2000 level, Webb said.
Based on seasonally adjusted data, employment in the following sectors decreased between October 2000 and October 2001: total non-agriculture, manufacturing, construction, services, wholesale and retail trade and transportation, communication and public utilities. Combined, these sectors represent a loss of 42,272 jobs.
Only two sectors showed an increase in employment. The finance, insurance and real estate sector showed an increase of 114 jobs, from 42,180 to 42,294.
The government sector added 3,466 jobs — from 235,531 to 238,997 — primarily in local government. Non-seasonally adjusted data showed the same trend, Webb said.
“Government is not as responsive to the economy’s ups and downs as some of the other sectors,” he said. “Those jumps tend to be more stable.”
The retail impact
In October, merchandise retail sales in Mississippi rose 3.9%, the largest increase since October 2000, also an unusually strong month for retail sales. Nationally, retail sales surged 7.1% in October, primarily because of strong auto sales spurred by low or zero percent financing offered by automobile manufacturers. Excluding auto sales, retail sales grew only 1%.
The Mississippi Employment Security Commission reported that the addition of approximately 3,100 retail jobs helped drop the state’s unemployment rate in November to 5.2%, below the national average of 5.3% The state’s unemployment rate in October was 5.3%.
“Those jobs were added for the holiday buying season, which appears to (have been) stronger in Mississippi than on a national level,” said Curt Thompson, executive director of MESC.
Bennie Dixon, manager of Sears at Metrocenter in Jackson, said even though the usual number of seasonal employees were hired, bringing store employment to 400, they didn’t work as many hours.
“The holiday season was somewhat of a soft selling cycle, but there were strengths in lawn and garden and sporting goods areas, mainly due to our company’s change in strategy,” said Dixon. “We brought in a lot more of the higher-end parlor-type games, like soccer or hockey tabletop games, rather than the smaller, less expensive ones. At our local store, it was very positive.”
Dixon said apparel sales, particularly women’s ready-to-wear, were strong in Jackson.
“That last week before Christmas, we saw a spike in sales, but not enough to offset earlier losses,” he said. “The inclement weather on Thanksgiving weekend, usually a very big selling time, affected our local market.”
Manufacturing employment continued to decline in October, falling an additional 0.4%, Webb said.
“In terms of employment levels as of October, this industry was 6.6% smaller than it was one year prior,” he said. “The declines in the manufacturing industry led the U.S. into the recession and an improvement in this industry will have to occur before the nation’s economy begins to expand again.”
Jerry McBride, president of the Mississippi Manufacturers Association, said some manufacturing sectors in the state are “going great guns.”
“Manufacturers that are doing well, such as in the furniture segment, have made good plans and maybe have their inventory down, but it’s a random deal,” he said. “None of the rest of us seems to be doing that great. Most manufacturers have a wait-and-see attitude about what’s going to happen in 2002.”
The average manufacturing workweek length fell in October, to 38.6 hours, down from 39.6 hours in September and well below the 40.4 hours reported in October 2000. Even though exact data was unavailable by press time, Webb said the average manufacturing workweek length rose in November.
“Some manufacturers are beginning to see the light,” said John Baas, director of industrial relations for MMA. “Others still have people laid off, or are working their folks four days a week instead of five, or are working one set one week and another set the next.”
One bright spot: Nissan-related suppliers, which not only include component suppliers, but tertiary industries, such as uniform makers.
“If you’re not involved in supplying to Nissan, that’s not good,” said McBride. “However, Nissan’s pending arrival will boost manufacturing across the state as a whole.”
The Fed effect
On Dec. 11, the Federal Reserve made its eleventh cut of the year, bringing the federal funds rate to 1.75%, the lowest since 1961.
According to a press release by the Federal Reserve, “Economic activity
remains soft, with underlying inflation likely to edge lower from relatively modest levels. To be sure, weakness in demand shows signs of abating, but those signs are preliminary and tentative. (However) the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate.”
In other words, the economy will turn around when consumers shake their fears and return to the malls, Webb said.
“Initial sales during the first week of January were surprisingly strong, an increase over last year,” Dixon said. “I think there was pent-up desire left over from the Christmas selling cycle. But it’s still early in the game.”
Dixon said most retail projections call for a soft first quarter and a rebound in the second quarter.
“We’re cautiously optimistic that 2002 will be a net positive,” he said. “We see the economy and retail in general rebounding this year.”
Most economists predict the national economy will turn around by mid-2002, Webb said.
“I think the state will do at least as good as the nation,” he said. “Historically, we tend to grow faster than the nation when coming out of a recession. The state indicators are not showing the recession is over, but they lend support to the notion of a recovery by mid-year.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at email@example.com</a.