JACKSON — The November issue of the Mississippi Economic Outlook, a quarterly publication, is now available. Published by the Center for Policy Research and Planning of the Institutions of Higher Learning (IHL), the Outlook presents the state economic forecast for 2012 to 2017, and includes detailed employment forecasts by sector. Regional, national and international developments impacting the state economy are examined.
The full report is available online at www.mississippi.edu/URC.
Mississippi Economic Forecast — Employment in Mississippi hit its lowest level since 1996 this summer. It is one of only three states with an employment level at its lowest point since the start of the recession in 2007. There was some improvement in September, but still the unemployment rate remains above 9.7% in most counties and no increase in payroll employment is expected for 2012 as a whole.
Some key indicators are improving, however. Residential building permits and housing starts are up sharply, retail sales continue to increase modestly, and manufacturing durables employment is up 0.8% as the Toyota plant and other new facilities go into production. General Fund tax collections are coming in above estimate. Both the Mississippi index of coincident indicators and the index of leading indicators (also published by the Center) rose in the most recent numbers available.
The Mississippi forecast is for slow but improving economic growth, with some pick-up in employment next year, led by healthcare and a turn-around in construction. The slow growth of employment remains a concern: it is now not until 2018 that state is expected to regain 2007 employment levels. Manufacturing, leisure & hospitality, and other sectors will reach that milestone even later. The upswing here will gradually strengthen, peaking 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 9.4% this year to 7.9% in 2015.
The recession in the Eurozone, the slow growth of the world economy, and the upcoming “fiscal cliff” in the U.S. are short-term concerns, yielding a risk of recession of about 20%.
Challenges Ahead — “The recent recession makes clear that the economic landscape in the state has changed. Data indicate that the skill and resource deficits here are limiting the ability of smaller firms to survive and thrive as market realities change,” said Senior Economist Marianne Hill. Bankruptcies rose 129% in Mississippi between 2000 and 2010, versus an increase of 60% in the U.S. Mississippi firms did not perform as well as those in other states by several other measures over the same period: the number of small firms (fewer than 500 employees), the number of establishment openings and the number of persons self-employed all fell in the state, but rose nationally.
The underperformance of professional & business services in the state is also a concern: nationally, this sector has had the most rapid job growth of any sector since 2010, but in Mississippi employment in this sector has been falling. This drop is linked to the challenges facing businesses here.
Federal funds flowing to the state have been falling. The state received $39 billion in 2011, due in part to flood insurance, but $27 billion in 2012. Apart from funds to finance the Affordable Care Act (ACA), a downward trend in federal dollars going to the states is expected. Mississippi now faces the option of expanding Medicaid, under the provisions of the ACA, and a study by this office examines the fiscal implications of its choice.