Alabama Business™

Established in 1930, each issue contains a free quarterly Alabama economic forecast update.

Economic Outlook Update:

Alabama Business | March 2023

➢ Following a 0.7 percent decline in the first half of 2022, Alabama’s economy, as measured by its Gross Domestic Product (GDP), rose 1.2 percent in the third and will most likely show an increase during the fourth quarter too.  For the year, Alabama’s economy is only expected to increase by about 1.3 percent, with employment growing at 2.7 percent.  For 2023, the state’s GDP will increase by 0.5 percent while employment is forecasted to rise by 0.3 percent depending on how mild or severe the expected economic slowdown is in 2023.

➢ The State lost 27,000 jobs in January over the previous month, bringing the total net gain in jobs to 54,100 from January 2022 to January 2023, while the seasonally adjusted unemployment rate was 2.6 percent in January 2023.

➢ During the period of January 2022 – January 2023, seasonally adjusted number of unemployed workers dropped from 60,4270 to 58,411.

➢ Year to date, total tax revenues increased by 8.2 percent in February 2023 to approximately $6.7 billion during the first five months of the current fiscal year.  For the same period sales tax receipts rose 6.6 percent to $1.3 billion while individual income tax revenues went up 10.4 percent, totaling approximately $2.7 billion.  Total tax revenues are forecasted to increase by about 5.3 percent for the FY2022-2023, a significant downward revision from CBER’s baseline forecast of almost 11.0 percent growth forecasted back in December 2022.

➢ For 2022, Alabama export totaled $23.4 billion, up from $19.0 billion in 2021, a 23.0 percent increase.  Transportation equipment remained state’s largest export, increasing from $9.6 billion in 2021 to $10.4 billion in 2022.  Imports rose from approximately $29.0 billion in 2021 to $34.2 billion in 2022, an increase of 18.0 percent.  Germany remained the largest destination for Alabama exports, totaling $3.9 billion in 2022, followed by Canada ($3.6 billion), China ($2.8 billion) and Mexico ($2.5 billion). 

➢  Consumer spending will grow by 1.0 percent in 2023 and 1.1 percent in 2024.  Overall business spending will rise only 0.3 percent in 2023 and 1.1 percent in 2024, while residential investments will decline 17.0 percent in 2023 after showing consistent decline for last seven quarters.

➢ Year to date, total tax revenues increased by 8.2 percent in February 2023 to approximately $6.7 billion during the first five months of the current fiscal year.  For the same period, sales tax receipts rose 6.6 percent to $1.3 billion while individual income tax revenues went up 10.4 percent, totaling approximately $2.7 billion.  Total tax revenues are forecasted to increase by about 5.3 percent for the FY2022-2023, a significant downward revision from CBER’s baseline forecast of almost 11.0 percent growth forecasted back in December 2022.

➢ U.S. inflation rate, as measured by consumer price index(CPI) rose by an annualized 6.4 percent rate in January while core CPI, excluding food and energy prices, also rose at 5.6 percent, just slightly below the 5.7 percent increase seen in December.  The forecast for inflation rate calls for a 4.0 percent increase in 2023, significantly below the 8.0 percent increase seen in 2022.

➢ U.S. economy grew by 2.9 percent during the fourth quarter 2022, down from 3.2 percent increase in the third quarter, during the first half of 2022, GDP declined by 1.1 percent.  The increase in the fourth quarter was primarily due to increase in inventory investments, consumer spending (2.1percent), federal and state and local government spending (6.2 percent and 2.3 percent respectively), and business spending (0.7percent).  It was offset by a decline in residential fixed investment (-26.7%). U.S. economy is expected to decline by about 1.0 percent in the first quarter 2023 and after a very mild downturn in the first half of the year, the economy should increase by a modest 0.7 percent for the year.

➢ Despite rising interest rates, slowing business spending and prospects of a recession, the employers continues to add to the payrolls, U.S. added 1.1 million jobs over the past three months, most of the jobs being added were in healthcare services, education and leisure and hospitality sectors. U.S. payrolls data continues to show it resilience, surging by 517,000 in January, compared to an average monthly gain of 401,000 in 2022, while the unemployment rate fell to 3.4 percent, lowest in 53 year.  The job gains were primarily in leisure and hospitality (128,000 compared to an average of 89,000 jobs per month in 2022), professional and business services (82,000, averaging 63,000 per month in 2022), and healthcare (58,000 jobs in January compared to an average monthly gain of 47,000 per month in 2022).  Payroll employment is expected to increase by 2.3 percent in the first quarter 2023, but will be on a downward trend for the remaining of the year for an annual increase of only 1.3 percent.

 

Quarterly Report

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