Unemployment Rates in the South
are about to Drop
Mike Randle, Editor
Note: In addition to being the editor of The Randle Report, Mike Randle is the editor of Southern Business & Development magazine (www.SB-D.com), the leading economic development publication in the Southern region. This article was published in a recent edition of SB&D.
The skeptics of the current economic recovery from the recession of 2008 and 2009 won't quit squawking until unemployment rates drop from the 8 to 12 percent seen in many areas of the country to 6 to 8 percent. While those lower rates will not be accomplished next year in many U.S. states, my bet is the South's average unemployment rate at the end of 2011 will be no higher than 6.5 percent, possibly lower. The regional rate is currently hovering at about 8.7 percent. That's a prediction of more than a 2 percent drop in a little more than a year.
The really cool thing about following and tracking economic development closely is you can see the job market’s future more clearly than what can be seen by gathering information from any other source.
For example, when a company announces a project, the jobs associated with that project typically don't factor into the employment picture for six months to a year. It’s even longer than that with very large projects of over 1,000 jobs, like Volkswagen's plant in Chattanooga that will open next year, Samsung's announced expansion in Austin and the ThyssenKrupp project that began operating in South Alabama in August. TK was announced in 2007 and they are just now ramping up their hiring.
So, when a talking head on the cable news rants about a "high unemployment rate that’s frozen" (like what was present during the summer and the beginning of the fall quarter), and asks "When are companies going to start hiring again?" well he or she is already six to 12 months behind the data flow that we in economic development use. If you are tracking all of the economic development projects currently and you have an 18-year book of history for each quarter as we do, it is very clear that companies are hiring now and fast in the American South.
How does the economic development crystal ball tell us that unemployment rates are about to drop and drop a lot next year? That's easy. This summer there were more projects announced by business and industry in the South than any quarter in three years. The winter and spring quarters of this year were also very good in new and expanded projects. That's three solid quarters in a row of improving deal activity in the South.
Surely that can't be the case you say. After all, many economists are not only predicting a double-dip recession, some think we are in a depression. We see and hear it on the cable news every day and night, right? Well, they are wrong.
Southern Business & Development prides itself in publishing almost, if not every single significant project announced in the South each and every quarter. And unlike other magazines, we don't just publish those projects on our Web sites, where space for copy is infinite. We put all of them in the print product you are holding in your hand.
In the summer of 2010, there were so many projects announced in the South that we had to expand our Relocations & Expansions section (page 20) to eight pages in this issue with a jump to page 60. Typically we run five R&E pages and that was a stretch between 2007 and 2009.
Because we own www.SouthernAutoCorridor.com, we have our own section in this magazine that exclusively focuses each quarter on projects from the automotive industry. For the second straight quarter the SouthernAutomotiveCorridor.com News section (page 26) is four pages long and profiles 44 large automotive projects that were announced in the South in the summer. That section had to jump to page 62 to fit those projects in. A year ago, we couldn't find enough automotive projects in the South to fill the two pages of space we typically allotted.
Again, almost all of the 40,000 direct jobs associated with this summer's surge in announced projects won't factor into the South's unemployment rate for six months to a year or longer. However, some of the indirect jobs created by those projects, like construction jobs, will show up within the next three or four months.
In other words, the projects found in our Relocations & Expansions and SouthernAutoCorridor.com News sections in this issue (go to www.SB-D.com) are commitments by companies to hire, but the bulk of those hires won't show up on the Bureau of Labor Statistics’ Web site until 2011. And combined with mass layoff events that peaked at almost 3,000 in February of 2009, but now are down to 1,600 in August 2010, the surge in job generating projects in the South throughout 2010 will mean one thing: an unemployment rate in 2011 that will eventually shut up the skeptics. How refreshing will that be?