Shopping at home is key to strong economy

Published 12:00 am Wednesday, January 23, 2008

The issue: Economists say Alabama will do better than most other states this year.

Our position: A key to a strong local economy is for people to shop at home and support local businesses.

The experts have said Alabama will fare better than most other states this year during a recession.

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At least that&8217;s the word from The Center for Business and Economic Research at the University of Alabama. Researchers predict economic growth of 2.2 percent for the state in 2008. That&8217;s down .01 percent from 2007. But the national forecasted growth rate is 2 percent.

Researchers also have predicted the creation of nearly 21,700 jobs, which is about 1.1 percent on the plus side of the ledger.

Expect residential housing growth to slow down in the state, but new industrial, school, medical construction and construction related to the Base Realignment and Construction program to offset that.

Growth in scientific, professional and national defense will give the weapons complex in North Alabama a boost. On the southern end of the state, expect export gains and new business at the Alabama State Docks to help boost the state&8217;s economy in the wake of the national slowdown.

There&8217;s a flip side to all the growth. Researchers say the textile and apparel industries will suffer and a slowdown in consumer spending will mean fewer sales tax dollars.Already, the Alabama Business Leaders Confidence Index has fallen into negative territory for the first quarter of this year to 47.2.

This is the first time the index has dipped below the neutral point of 50 since the survey of business leaders began nearly six years ago. At this point, the index is down 3.5 points from the fourth quarter of 2007 and is 6.4 points below its reading a year ago.

The greatest effect on local confidence is the national economy.

The regional breakdown omits the Black Belt, per se, and divides the state into four regions: Huntsville, Mobile, Birmingham and Montgomery metropolitan areas. Overall, the BLCI matches predictions out of the research center.

The regional outlook for Huntsville is highest at 53.3, an indicator that economic growth will increase from the strong pace it has in the beginning of this new year.

That&8217;s primarily because of the aerospace industry bringing in new firms and contracts. With growth comes spending, and businesses will benefit from that in the Huntsville region.

In Mobile, the regional confidence rate is 54.4. Construction of ThyssenKrupp has that area humming. Shipbuilding and the aerospace industry also contribute to this ranking. Mobile is expected to see a strong first quarter.

In Birmingham, the confidence index is down to 45.9 for the first quarter, that&8217;s 3.9 points less than the previous quarter. Sales growth is expected to be flat and capital expenditures are expected to decline.

A similar story is true in the Montgomery metropolitan area, which posts a 44.5 confidence ranking. Panelists for BLCI worried about hiring and spending trends in the region.

It would stand to reason that the outlook here 50 miles west of Montgomery would seem as bleak.

That might depend on how much confidence people have in their local economy. When we spend money in our local economy, it generally creates more jobs and more wealth for others.

Right now, more than ever, it&8217;s time to shop at home.