Outlook bullish for the Magnolia State in 2006
Published: December 19,2005
The year 2005 was on track to represent the best economic growth year Mississippi had seen since 1999.
During the first six months of 2005, wage and salary income grew at an annual rate of 6.4%. Through August, employment rose at an annual average rate of 1.2%. After losing 53,000 jobs between 2000 and 2003, the state was poised to return to the 2000 employment level by 2006.
Hurricane Katrina, the Category 4 storm that devastated the Mississippi Gulf Coast and heavily damaged the Pine Belt region August 29, changed all that. Employment declined nearly 57,000 jobs in one month alone.
“The damage notwithstanding, we are optimistic about the future,” said state economist Phil Pepper. “The historical pattern for areas suffering from a natural disaster is for the economy to suffer an initial decline followed by a period of rebound fueled by rebuilding. This was the experience following Hurricane Hugo in South Carolina and Andrew in Florida, as well as the four hurricanes that hit Florida last year. The question for Mississippi has been: how long and how deep will be the period of decline, and how big will be the rebound?”
Pepper projects a small, short-lived decline, followed by a strong rebound. Reaching the 2000 level of employment in 2006 remains on target. “However, the growth that would have occurred in 2005 will now occur in 2006,” he said. “Rebuilding will continue to fuel strong employment growth in 2007, such that by 2007, we will have more people employed in Mississippi than we would have, had Katrina not occurred.”
Even though individual income tax withholdings fell 9.4% in September, the state treasury surpassed October and November projections.
“I continue to be bullish about our state’s economy because I believe in the resiliency of Mississippi’s people,” said state treasurer Tate Reeves, who gave an optimistic post-disaster report to Wall Street September 22. “The positive revenue collections over the past two months indicate that resiliency is being carried over into our local economy.”
Mississippi will continue to see a large influx of federal money and insurance proceeds in 2006, Reeves pointed out, “however, the key to rebuilding bigger and better is creating an environment that encourages the private sector to reinvest capital in the affected areas.”
Barbara J. Logue, Ph.D., said that, to the extent historical experiences are replicated on the Mississippi Gulf Coast, long-term population losses are unlikely.
“Coastal lifestyles, despite their known hazards, remain very attractive to most people,” she said. “The availability of jobs, affordable housing and decent schools will bring back many evacuees and attract new residents to replace those who choose not to return. A temporary reversion to net in-migration seems likely as thousands of construction workers and others involved in the massive rebuilding do their jobs and then move on, as happened when the casino industry started up in the 1990s. While further damaging storms may deter rebuilding, cautious optimism about the future of the Gulf Coast now seems appropriate.”
Pete Walley, director of long-range economic development and planning at the University Research Center, a division of the Institutions of Higher Learning, said the effects of the hurricane will generally be positive for the state as a whole, even though people in areas directly affected will suffer more.
“But will the well-being of the state’s citizens improve significantly in the next year? I take no comfort in noting that in 2006, the state will continue to be 50th in per capita income, that teen and out-of-wedlock births will continue to be the highest in the nation, that about 40% of the students who entered first grade in the fall of 1993 will not earn a high school diploma, and that a host of similar statistics will not improve significantly. I also note that the changes occurring in our economy in 1993 continue today and are more significant.
“I am sure that Mississippians did not plan 12 to 18 years ago for our economy to perform as it did in 2005. I am equally sure that the long-range economic development planning conducted 12 to 18 years ago either was not heeded by those that were responsible for developing and implementing actions to significantly change our economy or the planning was faulty and incomplete.
“This year’s long-range economic development planning efforts will have very little impact on next year’s economic performance. If, however, the state’s citizens and policymakers will embrace a long-range economic development plan and aggressively implement actions required to improve our economy, then the citizens born in the fall of 2005 will participate in a vastly improved economy when they graduate in the spring of 2023.”
Contact MBJ contributing writer Lynne W. Jeter at email@example.com.
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