Established in 1930, each issue contains a free quarterly Alabama economic forecast update.
Economic Outlook Update:
Alabama Business | December 2022
➢ Following a 0.4 percent decline in the first quarter 2022, Alabama’s economy, as measured by its Gross Domestic Product (GDP), declined by 0.9 percent in the second quarter, but will most likely show an increase during the remainder of the year. For the year, Alabama’s economy is only expected to increase by about 1.1 percent, with employment growing at about 2.0 percent. For 2023, the state’s GDP will decline by 0.3 percent while employment is forecasted to decline by 0.5 percent depending on how mild or severe the expected economic downturn is in 2024.
➢ The State gained 17,100 jobs in October over the previous month, bringing the total net gain in jobs to 46,600 from October 2021 to October 2022, while the seasonally adjusted unemployment rate dropped from 3.1 percent in October 2021 to 2.7 percent in October 2022.
➢ The seasonally adjusted number of unemployed workers dropped from 70,569 in October 2021 to 61,760 in October 2022.
➢ Year to date, total tax revenues increased by 16.2 percent in October 2022, the first month of the current fiscal year. For the same month, sales tax receipts rose 9.0 percent while individual income tax revenues went up 26.0 percent, totaling approximately $246.3 million and $246.2 million respectively. Total tax revenues are forecasted to increase by about 11.0 percent for the FY2022-2023.
➢ For the first nine months of 2022, Alabama export totaled $18.9 billion, up from $15.3 billion for the same period last year. Transportation equipment remained state’s largest export, increasing from $7.8 billion to $8.2 billion for the same period, while imports rose from $23.7 billion to $28.1 billion. Germany remained the largest destination for Alabama exports, for the nine month period ending in September 2022, exports to Germany totaled almost $3.0 billion, followed by Canada ($2.9 billion), Mexico and China ($2.1 billion each).
➢ U.S. economy grew by 2.6 percent during the third quarter 2022, down from 0.6 percent decline in the second quarter and a 1.6 per cent decline in the first three months of this year. The increase was primarily due to increase in exports (14.4%), consumer and business spending (1.4% and 3.7% respectively), and both federal and state and local government spending (3.7% and 1.7% respectively). It was offset by a decline in residential fixed investment (-26.4%), inventory investment and imports (-6.9). Final sales to private domestic purchasers, an indicator of the underlying strength in overall aggregate demand —grew by 3.3 percent in the third quarter, after a 1.3 percent increase in the second quarter. U.S. inflation rate, as measured by consumer price index rose by an annualized 5.7 percent in the third quarter, following a 10.5 percent increase in the second quarter. The forecast for inflation rate calls for a 5.4 percent increase for the fourth quarter, followed by a 4.3 percent increase in 2023.
➢ Total U.S. nonfarm payroll grew by 261,000 in October while the unemployment rate rose to 3.7 percent. Most of the job growth was seen in healthcare (53,000), professional and technical services (43,000), leisure and hospitality (35,000), and manufacturing (32,000). Despite a slowdown in the overall economy, the labor markets have been holding up really well, however, the gains continue to show a declining trend.
➢ U.S. economy will most likely decline slightly by about 0.4 percent in the fourth quarter, the growth for 2022 is now expected to be 1.8 percent followed by a 0.2 percent decline for 2023. Consumer spending will grow by 2.7 percent in 2022 and 0.8 percent in 2023. Overall business spending will rise 3.2 percent in 2022 and drop by 1.5 percent in 2023. Inflation rate (consumer price index) is expected to remain around 8.0 percent in 2022 and could fall to 4.3 percent in 2023.