State Forecast
Regarding the outlook for Alabama, Bill Gunther, CBER Director, said, "Our problem isn't a short-term problem, it takes long-term planning, consistency, and vision to succeed."
Gunther predicts that the growth Alabama experienced in 1996 will slow to 1.9 percent as the state's available resources are depleted. Alabama created 27,000 jobs in 1996 and is expected to add another 20,500 jobs in 1997. Gunther said that there are simply not enough workers to fill the labor demand and that additional labor for future growth will have to come from in-migration.
Job Growth in 1997 is expected to be dominated by service sector jobs, particularly business services, health care and trade services jobs. The apparel industry will continue to decline as small apparel manufacturers find it difficult to compete with large companies.
Regarding per capita income, Gunther compared Alabama to Georgia. He said that just as there are two Georgias-Atlanta and the rest of the state; there are two Alabama-the 11 metropolitan areas and the rest of the state. Most of Alabama's jobs are in these metro areas-425,000 in Birmingham alone. While Alabama's per capita income is nearly $4,000 behind the national average of $21,696, the per capita income of the state's 11 metro areas is $19,116-closer to the national average.
Rural Development
David Barkley, professor and economic development specialist at Clemson University presented the prospects for rural development. He categorized rural areas in three ways-dazzling, dim or uncertain-according to their prospects for development. Areas included in the dazzling category are those offering a high amenity lifestyle, those which have regional shopping outlets, and those on the fringe of metropolitan areas. Areas in the dim category are geographically isolated, farm dependent, and specialize in low-skill labor industries. Areas in the uncertain category are those with smaller shopping, service, and manufacturing centers.
Barkley said rural areas have two options for adapting to the competitive environment. One, which he called the high road strategy, includes improving labor productivity and quality of life. The low road strategy is to reduce local production costs. But Barkley said this strategy is no longer feasible due to the low costs of doing business in countries like Mexico and Taiwan. "The only alternative for rural areas is the high road strategy," he said. He recommended that rural areas categorized as dim or uncertain look at strategies for retention/expansion of existing industry, small business development and investing in human capital-not infrastructure.
Revenue Outlook
Ira Harvey, a financial project manager for UAB, presented Alabama's revenue outlook. Harvey said that Alabama's revenue growth will be slowing over the next few years and that the state is already one of the ten slowest growing (income) states in the United States. In 1996 Alabama's total tax revenue was nearly $65 million less than was projected. He cited negative growth of tax revenue from corporations as one of there reasons.
Regarding funding for education, Harvey said, "We wish to look like other states, but we do not wish to fund like other states." According to Harvey, Alabama is $765 million short of the southeastern average for total revenue per student funding and nearly at the bottom in the United States.
National Outlook
Presenting the forecast for the nation was Kurt Karl, a senior executive vice president of The WEFA Group. Karl called the nation's economic status "boring" from an economist's point of view, but excellent for business. He said that the current trend of high profits and moderate growth could be expected to continue into the next millennium. He predicted no significant change in inflation and a strengthening U.S. dollar. -----
Note: This article was extracted from Developments, Volume 2, Issue 2, a publication of the Economic Development Partnership of Alabama.
Corporate sponsors for the Outlook Conference were Alabama Power Company, AmSouth Bank, Boise Cascade-Jackson Mill, Economic Development Partnership of Alabama, Energen Corporation, and Vulcan Materials Company.
Copies of the 1997 Alabama Economic Outlook publication are available from CBER for $15.
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