A commercial construction economist has delivered a half-cup of good cheer on Mississippi’s economic prospects for 2012 and predicted the state should return to its pre-Gulf oil spill pace.
Anirban Basu, chief economist for the Associated Builders and Contractors, set 2012 economic growth at 2.4 percent nationally and said he expects regaining momentum lost to the BP oil spill will let Mississippi “out-perform the national economy going forward.”
He cited inexpensive labor, a prosperous oil and gas sector and a strong economic development effort that has been especially adept at attracting green technology firms. “Mississippi should be among the more rapidly expanding economies in the U.S.,” he said. “I would expect the economic growth will be slower in the industrial Midwest and parts of New England. Mississippi I think is in a surprisingly good place.”
The 9,700 new jobs created in Mississippi in the last 12 months proportionally matches the lackluster rate of job growth nationally. But, Basu said, “I expect it would have been better except for the BP oil spill.”
Basu said initiating President Obama’s proposal for billions of dollars in new road and bridge building and other infrastructure work could propel economic growth close to double digits. “Game-changers” like high-speed rail and broadband expansion could be especially helpful, he said.
“I wouldn‘t be surprised that instead of 2.4 percent growth we could see something close to 10 percent.”
A moment later in the interview he reassessed the prediction of 10 percent, noting that it most likely would take to 2013 to get most of the larger infrastructure projects going.
In a visit to Jackson last year, Basu told the Mississippi chapter of the Associated Builders and Contractors that 2011 would merely be “less bad” than 2010. He said he based the less-than-inspiring prediction on the winding down of the previous $800 billion stimulus package and a decline in state and local government spending.
In an interview in mid November, Basu affirmed his earlier prediction for 2011, noting “things have been less worse. The nation has not slid back into recession.”
While Basu sees a rebound pace for Mississippi and continued overall recovery for the nation, he warned the construction industry here and elsewhere is several years away from returning to prosperity.
The spring and summer slump took a toll on construction spending, he said. “One of the casualties of the soft patch was to destroy the confidence of developers and other purchasers of construction services.”
The slowdown of 2011 caused front-burner projects to end up on hold. “But at some point the momentum will stop being latent and will start becoming apparent again,” Basu said. “The construction economy was making progress. Then it stopped.”
Projects set to break ground in 2011 and 2012 could get starts in 2013 and 2014, when “we might finally be positioned for a strong construction recovery,” the Maryland-based economist added.
A key structural problem is the huge over-abundance of retail around the nation and in parts of the South, he said. “Too many strip centers, too many malls, too many outlet centers were developed in the last decade.”
The Gulf states have the added burden of surplus commercial space created by the easy access to cheap money offered by Gulf Opportunity Zone, or Go-Zone, bonds, according to Basu.
He called Go-Zone the “tail wagging the dog” and an economic miscalculation of creating product for which little demand existed. “The reason people should move ahead with construction is that there is growth in a market currently under-served — not procuring new buildings just to take advantage” of low-cost money.
Stanley Magnum, chairman-elect of the Mississippi chapter of the Associated Builders and Contractors, said he expects 2012 construction “will be flat at best.”
Magnum’s MMC Materials Inc. of Jackson, provides concrete to builders from Memphis to Wiggins. “With home building down we’re down.”
The good news for concrete suppliers, he said, is that “we have absorbed” the dramatic fall off in business volume that followed a robust 2007.