Economic recovery from the pandemic is exceeding expectations in Alabama, and it should continue to do so, barring another shutdown, according to the UA Center for Business and Economic Research.
“We will most likely see 5.0 to 5.5 percent growth for this year, and perhaps next year too, on the condition that we don’t shut down the economy again,” Ijaz said. “Another shut down will most likely have a much more devastating impact on the economy.”
CBER released its quarterly economic forecast, Alabama Business, Tuesday, which showed the state’s economy grew 6.8% in the first quarter of 2021, which followed a strong half of 2020 after plummeting economic activity the first half of last year.
The forecasted 5.5% economic growth for 2021 will make up the 2.7% drop in economic activity in 2020.
The state’s economy has continued to beat growth forecasts as business sectors come back at different speeds because of supply constraints and loose monetary policy fueled business and consumer spending, Ijaz said.
“At the start of the year, everybody was predicting that the economy would get back to its normal course after a huge jump in growth in third and fourth quarters of 2020, but as the year went along the economic growth just kept on accelerating,” he said.
The state gained 13,200 jobs in June over the previous three months. From June 2020 to June 2021, the state gained 89,200 jobs with a seasonally adjusted unemployment rate this June of 3.3%, down from the 7.7% unemployment rate in June 2020, according to the study.
Also, CBER released its latest quarterly survey of local business leaders. Taken in the first half of June, it showed historical confidence about the direction of Alabama’s economy. The Alabama Business Confidence Index was 67, up nearly three points from the spring survey.
It’s the most confidence business leaders have had in forecasting economic growth since the third quarter of 2004, according to CBER data. Plus, this is the third consecutive quarter all the industry-level ABCIs have been positive, indicating sustained expectations for economic expansion across all industries in Alabama.
An index over 50 indicates a positive forecast compared to the previous quarter, and the higher the number, the more confident the forecast. The statewide and national forecasts, along with industry-specific components like sales, profits, hiring and capital expenditures comprise the six indexes that combine to make the ABCI total.