Local economic prospects state's best, survey finds

Growth slows in 4th quarter, still outpaces U.S. rate

Alabama business leaders expect the state's economy to continue to outperform the U.S. economy in the fourth quarter, but their overall confidence level has fallen, a new survey by Compass Bank finds.

The survey also reported that economic prospects for the Huntsville metro area remain the state's best, according to Compass' Alabama Business Leaders Confidence Index, which covers all of the state's counties and each business sector.

"These are good times in Alabama - you should enjoy it, cherish it," said Dr. Sam Addy, an economist with the University of Alabama, who spoke at a luncheon Wednesday hosted by Compass at the Embassy Suites. "Alabama has outperformed the U.S. economy in this decade. Per capita income is the highest it's ever been - 86 percent of the U.S. average."

The release of the survey data was highlighted at the luncheon as Addy talked about Alabama's economy, and Mark Sfiligoj, who works for the business publication The Kiplinger Letter, offered a mixed review of the U.S. economy.

Addy directs the Center for Business and Economic Research at UA, which helps conduct the survey for Compass. He said growth in Alabama has slowed in 2007 but still outpaces the U.S. rate. The strong state economy is marked by low unemployment, solid tax revenues, a business-friendly government and quality job training, he said.

The survey, which uses 50 as a neutral point, showed that the overall confidence rating for the fourth quarter was 50.7, a drop of six points from the previous quarter. The fall was attributed to pessimism about the U.S. economy and a decline in confidence about Alabama.

The confidence rating for the state remained positive at 55.8, but employers predicted little change in their hiring practices and said sales, profits and capital spending would be up moderately in the fourth quarter.

Addy joked that Huntsville's economy was so good that he wanted to move here. He also identified a long-term challenge for Huntsville: Find enough workers to fill the jobs that will continue to be created.

Huntsville's population increased by 10 percent from 2000 to 2005, which buoyed the labor pool, Addy said, adding that the growth trend needs to continue.

The addition of 4,700 BRAC jobs and workers moving to fill them will help the work-force balance in the near term, he said.

Nationally, the economic outlook is bleaker for 2008, said Kiplinger's Sfiligoj. He said the opinion of the publication staff is that the U.S. economy will grow about 2 percent next year, higher than most forecasts to date.

"This is a time of considerable anxiety about the economy," he said. "We don't think there will be a national recession, though it may be nip and tuck.

"A recession is a decline in production for six to nine months, and for that to happen you'd need two of four groups to collapse - consumer spending, business spending, government spending and overseas spending."

Sfiligoj said government spending remains high and overseas spending is strong, while consumer spending has pulled back and business spending has slowed.

"We'll have sector recessions, in housing and automobiles, and that will feel lousy for some people," he said, "but it is not a recession."