State's 3-year per-capita growth ranks near bottom

South Carolina's per-capita economic growth, when adjusted for inflation, was second-lowest in the nation over the past three years, rising just 2.6 percent from 2003 to 2006, according to a government report released Thursday.

Only Michigan ranked worse, with a decline of 1.2 percent over the same period, according to the data from the U.S. Bureau of Economic Research.

Nationally, the economy grew an inflation-adjusted 7.3 percent per person in those three years.

Shrinkage in the state's manufacturing sector together with a population boom that has outpaced job growth contributed heavily to the subpar performance, economists said.

State gross domestic product is the total value of all goods and services produced in the state and is the broadest measure of economic strength.

When rated on a per-capita basis, South Carolina never fares well, said Mark Vitner, a senior economist with Wachovia Corp. in Charlotte. For example, the state has some rural poverty issues that are difficult to overcome, he said.

That contributes to an unemployment rate that consistently ranks among the worst in the nation, dragged down by a once-thriving textile industry that has been ravaged by foreign competition.

At 3.5 percent, South Carolina's total inflation-adjusted growth last year was respectable, Vitner said. But the nondurable goods manufacturing sector, which includes textiles, continues to drag down the state.

The cyclical slowdown in residential construction may hurt the state through this year, he said, but the lost manufacturing jobs are likely gone for good.

"The only way manufacturing will be 20 percent of South Carolina's economy is if the rest of the economy shrinks, and that's not the way we want to get there,"

Vitner said.

The key is education, he said, as firms across the state tell him one of the biggest problems they face is finding qualified workers.

But the new or retrained work force is only part of the equation, said Donald L. Schunk, a research economist at Coastal Carolina University.

Last year, unadjusted for inflation, South Carolina's GDP totaled $149.2 billion, up 16.7 percent from 2003. That growth placed South Carolina 40th out of the 50 states and the District of Columbia.

But on a per-capita, inflation-adjusted basis, South Carolina fell from 41st place in 2003, when GDP per person amounted to $28,880, to 46th in 2006, at $29,642.

Schunk said the weaker per-capita ranking means the population is growing at a faster rate than the economy. South Carolina's population grew 4.3 percent over the 2003-06 period, according to the Bureau of Economic Research study.

"We're growing jobs, but not as rapidly as we need to absorb all these new people," Schunk said.

Reach Peter Hull at 937-5594 or phull@postandcourier.com. Michael Buettner of The Post and Courier contributed to this report.