Economic Outlook for South Carolina: A Slow Brightening for 2025

Aerial view of Charleston, South Carolina. Jupiterimages/Getty Images

More job openings, more consumer purchasing power, and more worker shortages in 2025—that was the view of several expert economists in December at the 44th annual Economic Outlook Conference in Columbia, South Carolina.

Held by the University of South Carolina’s Darla Moore School of Business, the conference featured one U.S. Chamber of Commerce economist, one human resources solutions CEO, and two USC professors and researchers, all of whom anticipate the coming year to bring more economic stability to the Palmetto State because of signs and trends from 2024.

“We are entering a new era—moving away from a Pandemic bubble and toward more sustainable growth rates going forward,” said keynote speaker Professor Joseph Von Nessen, research economist with the business school. “This adjustment period is, for the most part, behind us ... which allows us to move into more sustainable growth territory in 2025.”

Using slides and graphs, Von Nessen highlighted five topics related to economic recovery for the state.

Consumer Confidence

How are people in the Palmetto State perceiving the state’s current economy?

“The short answer is ‘not good’ in 2024,” Von Nessen told the gathering. “We’ve seen a significant increase in prices and inflation in several years, and that’s created a lot of frustration among the public.”

For example, inflation has pushed the prices of goods and services to previously unthinkable levels: a gallon of Walmart brand orange juice, for instance, rose several times in the last two years from $3.99 to around $8 now—when it’s available, he said.

“From summer 2021 to summer 2022, inflation jumped from 5 percent to 9.1 percent,” Von Nessen said. “That generated a bigger pullback in consumer confidence than 2020 and has had a major effect on the mood of the country.”

He also mentioned that while economic perception remains fairly low compared to 2019, the New Year is showing signs of an uptick as Pandemic concerns continue to lessen.

“There has been no discernible difference in the weekly average initial unemployment claims in past three years,” he said. “And we expect more stability next year, with stable consumer spending overall, positive wage growth, and a solid labor market.”

Labor Shortages and Rising Unemployment

The state’s and the nation’s labor market, however, has been punctuated for several years by more open jobs than the number of people able or willing to fill them.

The U.S. Chamber of Commerce estimates that the U.S. workforce had about 7.7 million job openings in early December, and only 7.1 million unemployed workers.

Von Nessen showed that from January to October 2024, unemployment rates in South Carolina rose from 3 percent to 4.7 percent, which correlates to a similar, national trend—“a pretty sizable increase in a short amount of time,” he said—and posed the question of whether a recession is looming.

Curtis Dubay, chief economist with the Chamber who spoke at the conference, said the labor shortage is going to stay for a “very, very long time.”

“This is a global issue—every industry, every size business, everyone’s looking for workers,” Dubay said.

He cited an aging population, low fertility rates, and legal immigration as contributing factors. And even if the U.S. economy continues to grow at a pretty robust clip in 2025, as Dubay anticipates, the economy of South Carolina and all other states is “not going to be getting more workers anytime soon.”

“That means businesses will continue to hire and keep workers through a downturn if there is one,” Dubay said. “And they’re going to have to continue to pay pretty competitive wages to get people in and keep them in their businesses.”

Recovery in Consumer Purchasing Power

In good-news, bad-news fashion, Von Nessen explained how 2024’s economic gains were often negated by other factors, both in South Carolina and across the United States.

For example, from June 2022 to November 2024, U.S. inflation fell from 9.1 percent to only 2.7 percent.

Because prices for goods and services have risen much faster than wages in the past 12 months, consumers have lost “significant purchasing power.”

Von Nessen pointed out that food prices in 2024 alone went up 28 percent—such that $100 worth of groceries in December 2019 cost $128 in October 2024.

“That’s a pretty big difference, and the type of thing consumers have been seeing on a regular basis,” he said.

“The good news though is that we’re moving in the right direction. Over the last year, we’ve actually seen inflation drop below the average rate of wage growth in the United States, which means consumers are beginning to claw back some of that lost purchasing power. And I expect in 2025 consumers will recover all that purchasing power.”

Lower Risk for Recession

Despite hinting that a recession could happen next year, Von Nessen said all current signs are pointing to South Carolina maintaining a historically low unemployment rate, a healthy labor market, very strong wage gains, and a position of recovery more indicative of the pandemic rather than the last full recession of 2008, when it took “about seven years to recover all the employment losses that we incurred following the 2008 financial crash.”

“Compare that to the recovery in 2020: It took us only about two years to recover all the losses,” he said.

“We had more employment losses during the COVID recession—we lost about 15 percent of our total employment base in a 60-day period in 2020—meaning we had a faster bounce back than in 2008, in part because we saw significant stimulus dollars and also coupled with a rapid recovery as businesses began to recover.”

Higher Risk for Inflation Rebounding

The current goal of the U.S. Federal Reserve is to get inflation down to 2 percent in the coming year.

Of all the factors battling this effort—such as strong consumer spending and elevated shipping costs—Von Nessen said inflation is the most uncertain.

“That’s the major wildcard, the major risk factor for our outlook next year,” he said.

“While inflation has been hovering around 2.5 to 3 percent since July 2023, it hasn’t maintained that momentum for getting us down to the Federal Reserve’s goal. And there is a significant chance, 50-50, that inflation may rebound next year—making this the biggest short-run economic threat for 2025.”

He then clarified that of the four economic components needed to reach this inflation level—food, energy, other commodities, and the service sector—the one that is driving inflation is service, such as housing.

According to the U.S. Census Bureau and the Department of Housing and Urban Development, the average sales price of homes across the nation is 82 percent higher in 2024 than in 2010—a difference in value of about $225,800.

However, Von Nessen said the increase in home prices is starting to slow.

“Housing prices are still rising, but not nearly to the degree they were before 2022,” he said.

As for what could reduce inflation to the 2 percent level in 2025, he said that at this point, “we really don’t know” because of so many other factors—such as labor shortages and strikes, high government spending, and the likelihood of new tariffs.

And there is one other ongoing factor expected to influence the economy on both a state and national level: employer challenges in finding and retaining not only enough workers, but the right workers.

This factor was revealed in a 2024 survey by Catapult Employers Association in Charlotte, North Carolina, which currently provides human resources solutions, business management consulting, and employment services to about 2,000 employers across the Carolinas.

“The ability to pay competitive wages ... was not even on the radar when we did this survey in 2024,” said Cheryl Richards, president and CEO of Catapult, and the last speaker at the conference.

“But for 2025, it went from zero to 38 percent, and it’s what we’re hearing from employers because they’re finding it harder to find the talent.”

She further explained that while everyone who wants a job can have one, based on current labor shortages, the problem revolves around employee salary expectations, disparities in employee skills gaps, and the present riddle of solving inflation.

“When an employee gets their 3.5 to 4 percent cost of living increase, it’s just not keeping pace with the compounding inflation factor,” Richards said. “And it’s leading people to say ‘I need a competitive wage.’”

So where do all of the economic data and projections leave South Carolina for 2025? All of the conference speakers indicated a lot of promise and the edge of a slow brightening, unless something unexpected occurs.

“We have a pretty rosy outlook so far,” Von Nessen said.

“And especially if we get to the point where consumers are able to really claw back all of that lost purchasing power next year, it will be the first time that we see the economy potentially firing on all cylinders since 2019.”