USC Economist Von Nessen Sees Slower Growth, ‘Decaffeinated Economy’ Ahead

A strong labor market is one of the main indicators that South Carolina market conditions are remaining stable for now, USC economist Joey Von Nessen said during an economic update he presented for the Charleston Home Builders Association. “It’s the single biggest predictor of housing demand. Right now, the U.S. job-opening rate exceeds the employment rate.” But Von Nessen did caution that signs points to slowed growth for the remainder of 2019 and into next year. “When we look back next year, we will say 2019 was a good year, but 2020 probably won’t be as good.” Factors include a slowdown in global markets, especially for South Carolina trading partners Germany and China. In tariff disputes, Von Nessen said any short-term victories in the absence of an overall agreement could increase the chances that manufactures relocate out of South Carolina, which would be a long-term loss for the state economy because “it’s more permanent than price increases.” While the U.S. continues its historic economic expansion, there remains a psychological effect for business leaders to wonder when that streak would end. Von Nessen compared the 2017 tax cuts (or “Trump Bump”) as creating in 2018 a “caffeinated” economy, where “the U.S. economy drank a Red Bull and the effects are wearing off. We are now in a decaffeinated economy.” (Post and Courier)

Talks to Boost Consumer Spending Include Temporary Cut to Payroll Tax

President Donald Trump confirmed that a temporary cut to payroll taxes was among ideas discussed with White House advisors to provide working Americans with a boost to disposable income. “Payroll tax is something that we think about, and a lot of people would like to see that, and that very much affects the workers of our country,” Trump told reporters. Millions of Americans pay a 6.2% payroll tax on their earnings up to $132,900, which funds Social Security programs. The payroll tax was cut to 4.2% in 2011 and 2012 but reset to 6.2% in 2013. Those cuts eliminated more than $100 billion in federal revenue each year. While the White House would have to persuade lawmakers from both parties to pass such a move, Trump’s idea to change capital gains taxes to help investors could be authorized without congressional approval if the Treasury Department agrees on how those taxes take inflation into account. (Washington Post)

Only 3 SC Counties Do Not Add on To State Sales Tax

Georgetown, Greenville and Oconee are the only three of South Carolina’s 46 counties that do not impose local sales taxes beyond the state’s rate of 6%, set in 2007. “I don’t think we’ve been deprived,” said Greenville County Councilman and Finance Committee chair Bob Taylor. “We don’t look for ways to raise revenue, unless we have expenses we can’t meet.” When local taxes for purposes such as property tax relief, roads and schools are tallied elsewhere, the total general sales tax rate in many counties approaches 9%. The Tax Foundation says that this year South Carolina has the nation’s 17th-highest combined state and local tax rate. A proposal released in 2018 by the S.C. Chamber of Commerce called for a reduction in the sales tax rate by applying it to items that are now exempt, such as groceries and taxes on services. The last state sales tax increase shifted much public school funding from property taxes to the sales tax. “I think people like the idea of offsetting their property tax with the sales tax,” said Tim Winslow of the S.C. Association of Counties. “People like to pay in increments, as opposed to a big bill.” York County’s history of sales tax increases traces to 1997 when it aimed to raise almost $100 million for roads. Sales taxes for transportation programs have been repeatedly reimposed by voters in 2003 and 2011, with a 2017 vote passing by 78%.  “What’s really interesting is, invariably taxpayers will vote to reimpose it at larger margins than the original tax,” Winslow said. “I have no idea why that’s true.” (Post and Courier)

Sen. Graham Tells S.C. Businesses That China Trade War Will ‘Cause Some Pain’

U.S. Sen. Lindsey Graham predicted that President Trump’s trade war with China will affect South Carolina supply chains for the state’s homebuilders and construction industry. “This China dispute is going to cause us some pain. But, if we don’t pay now, we’re going to pay later,” Graham said at a meeting of the Building Industry Association of Central South Carolina. Graham supports the president’s tariffs, saying it is an unavoidable way to force China to change business practices that include intellectual property theft and forced technology transfers. “They take your product and knock it off, and nobody can compete with a country like that,” Graham said. “This is the last chance in my lifetime and your lifetime to get China to play by the rules. They’re too big to allow them to cheat.” Graham also stressed the need to find bilateral immigration reform. “If we don’t change our immigration system, we’re going to run out of workers in this country … (Working immigrants must be allowed to) pay taxes, obey the law, make their lives better and give you a reliable workforce. All of them don’t have to stay here to become citizens.” (The State)

State’s Historic Structures Can Apply for $1.9M Fund for Hurricane Irma Repairs

The owners of South Carolina historic structures damaged two years ago by Hurricane Irma can request funds to repair that damage thanks to $1.9 million awarded to the South Carolina Department of Archives and History through the National Park Service’s emergency supplemental grant program and the Historic Preservation Fund. Corporations, municipal or state government, and nonprofits must own property that is on or would be eligible for the National Register of Historic Places. Grant program details can be found at scdah.sc.gov , and applications are due Nov. 7. (The State)

WHAT THEY’RE SAYING

“That’s a good thing. When people are working and earning incomes, they spend that money in the U.S. economy.”

USC economist Joey Von Nessen, citing the statistic that none of South Carolina’s counties are experiencing a downturn in employment growth