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State economists lower growth forecast for rest of year

 

By TED CARTER

Mississippi’s state economists have pulled back on an already-weak economic forecast for the rest of 2016, projecting that the state’s economy will grow only 1.5 percent instead of the 1.6 percent previously predicted.

The new report from state economists includes at least some good news on jobs, forecasting a 1 percent increase in payroll employment for the remainder of the year. If this occurs, it would be only the second annual increase in employment in Mississippi of 1 percent or more since 1999. Last year showed a 1.2 percent increase.

State economists forecast 3.2 percent growth in Professional and Business Services in 2017 but predict the sector will lose 2,700 jobs by the end of the year. The sector is seen rebounding with 2,300 additional jobs in 2017 and topping increases in all employment categories in 2018 with an employment rise of 3.1 percent.

Unsurprisingly in a state government that last fiscal year drew tens of millions of dollars from its rainy day fund to make ends meet, government employment for the rest of the year is projected to contract a half percent. Economists say this number is significant because government spending represents the largest portion of the state’s real GDP.

“We do think that growth is going to be more in the private sector,” Darrin Webb, state economist, said in an interview last week.

For Mississippi’s overall economy, “We’re forecasting modest growth the next several years,” he said, putting the state’s “real” GDP growth through 2018 at 1.5 percent. Real GDP is a measure of the value of goods and services output adjusted for price changes.

While the “Mississippi Economic Outlook” from the University Research Center of the Mississippi Institutions of Higher Learning trims the state’s economic growth by .01 percent for the rest of the year, the 1.5 percent growth it predicts would be the first increases in real GDP in Mississippi in consecutive years since 2008.

Mississippi officially climbed out of recession last year by capping 2015 with a growth in real GDP of 0.7 percent, the first increase since 2012.

For 2017, state economists project real GDP in Mississippi to grow at an annual rate of 1.6 percent, a slight a slight increase over 2016.

The latest forecast for growth in the U.S. economy in 2016 stands at 1.4 percent, a reduction of a half percentage point from the previous forecast, the state’s fall forecast reports. Improvement is expected in real GDP nationally in 2017 and 2018, with growth of 2.2 percent forecast for each year.

Meanwhile, Mississippians are forecast to see income increases of 3.3 percent in 2016 based on stronger income growth the first two quarters of the year. “If the forecast of 3.3 percent growth for 2016 is realized, it will represent the largest increase in personal income in Mississippi since 2012, when personal income grew 3.9 percent,” the “Mississippi Economic Outlook” reports.

The report says Mississippians can expect income increases to continue in 2017 and 2018 with growth forecast to reach 3.8 percent for 2017 and 4.8 percent in 2018.

The 4.8 percent growth in income forecast for 2018 would be the largest increase in personal income in Mississippi since 2008, when personal income in the state grew 5.2 percent, the fall report says. The income forecasts for Mississippi are in line with forecasts for U.S. personal income in 2018, when incomes nationally are projected to rise 4.9 percent.

For 2017, incomes nationally are expected to outpace Mississippi’s projected 3.8 percent growth by increasing a full percentage point to 4.4 percent, according to the fall report.

Look for job Mississippi’s growth to total 0.9 percent through 2020, the fall report says. Though below a full percent, the average job growth is an improvement over the 0.08 percent Mississippi saw from 2011 to 2015, state economists say.

The Leisure and Hospitality sector is projected to bring the largest employment gains for the remainder of this year, adding 3,600 jobs.

By percentage, the Transportation and Utilities sector is expected to generate the largest increase in employment in 2016 of 3.1 percent. The largest drop is projected to be in Natural Resources and Mining is projected, with an employment decline of  9.5 percent.

Webb, the state economist, said signs are that Mississippi’s manufacturing will be growing the next few years.

Construction is also seen rebounding, he said. “We think construction will be coming back. That has been kind of a drag for us.”

The fall report predicts a 2.4 percent increase in construction spending in 2017.

Health care, a mainstay of metro Jackson’s economy, is also projected to continue its growth, according to Webb.

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