Alabama's Outlook: A Little Better Than 2012
Winning the college football national championship isn't all that's on the minds of our friends in Tuscaloosa these days. A few days after the Crimson Tide's victory, economists at The University of Alabama's Center for Business and Economic Research (CBER) discussed developments in the state during 2012 and prospects for 2013 at the Center's 25th annual Economic Outlook Conference.
- The state's economy will continue to show improvement in both output and employment during 2013. Real gross domestic product growth of 1.7 percent to 1.9 percent is forecast for 2013, about the same pace of expansion as in 2012.
- The pace of job growth is expected to pick up modestly from the 11,300 jobs added in 2012. About 15,000 to 20,000 jobs could be added in 2013. However, the unemployment rate will remain around its current seasonally adjusted level of 7.8 percent as individuals enter or reenter the labor force.
- Large transportation equipment-related manufacturing and service-providing employers will be the major economic drivers in 2013. These include firms in industries such as automotive manufacturing, shipbuilding, steel, tourism, healthcare, and business services. Exports should also continue to boost the Alabama economy.
- Alabama's private contractors and government facilities engaged in aerospace and defense-related projects will remain cautious about hiring or making new capital investments until they get some clarity on federal spending plans.
Lesley McClure, the regional executive at the Birmingham Branch of the Atlanta Fed, agreed with Dr. Addy's assessment.
"The sentiment I've heard from my business contacts throughout the state largely mirror's Sam's outlook. There are pockets of strength—autos, for example—but my overall take is that businesses remain cautious. While there seems to be more optimism, it's cautious and weighted toward the latter part of the year."
Lesley covers the state of Alabama as part of the Atlanta Fed's Regional Economic Information Network (REIN). On employment, she reports that there is very little net new hiring for the state as a whole, but her contacts are not planning layoffs, either. Lesley also noted that her contacts report that uncertainty surrounding fiscal policy remains a headwind to businesses proceeding with expansion plans.
"The Fed has done a great deal to date to promote recovery, but the ongoing effectiveness of Fed efforts does depend critically on the removal of fiscal policy uncertainty."
The Atlanta Fed's executive vice president and director of research, Dave Altig, presented his view of the macroeconomy and Fed policy at the CBER conference. His presentation can be found here.
By Michael Chriszt, vice president and community affairs officer in the Atlanta Fed's Public Affairs department
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