Established in 1930, each issue contains a free quarterly Alabama economic forecast update.
Economic Outlook Update:
➢ Following a 5.7 percent rate of increase seen in the fourth quarter 2021, Alabama’s economy declined by 1.8 percent in the first quarter, and will most likely show another drop in economic growth in the second quarter. For the year, Alabama’s economy is only expected to increase by about 1.2 percent, with employment growing at about 1.8 percent.
➢ The State gained 5,700 jobs in June over the previous month, bringing the total net gain in jobs to 41,200 from June 2021 to June 2022, while the seasonally adjusted unemployment rate dropped from 3.5 percent in June 2021 to 2.6 percent in June 2022.
➢ The seasonally adjusted number of unemployed workers, based on a household survey, dropped from 79,439 in June 2021 to 60338 in June 2022.
➢ Year to date, total tax revenues have increased by 15.3 percent from October 2021 to July 2022. For the same period sales tax receipts rose 7.6 percent while income tax revenues went up 25.4 percent, totaling $1.5 billion and $3.2 billion respectively. Total tax revenues are forecasted to increase by about 12.0 percent for the FY2022.
➢ For the first five months of 2022, Alabama export rose totaled $10.2 billion, up from $8.4 billion for the same period last year. Transportation equipment remained state’s largest export, up from $4.2 billion to $4.3 billion. During the same period, imports to Alabama totaled $17.9 billion, up from $15.5 billion during previous year. Germany remained the largest destination for Alabama exports, exports to Germany totaled almost $2.0 billion, followed by Canada ($1.9 billion), Mexico ($1.4 billion) and China ($1.3 billion).
➢ Nonfarm payroll growth in July blew past expectations, registering a 528,000 monthly gain, the fastest pace of growth since February. The economic data are sending mixed messages with employment gains completely out of line with other economic data. Job growth was led by gains in leisure and hospitality, professional and business services and healthcare. Total nonfarm employment is forecast to increase by almost 4.0 percent in 2022 with leisure and hospitality sector continuing to add jobs due to huge losses suffered during pandemic, followed by a 1.0 percent rate of growth for 2023.
➢ After growing by 6.9 percent in the fourth quarter 2021, the U.S. economy contracted by 1.6 percent in the first quarter of 2022, followed by another contraction of 0.9 percent in the second quarter. The decline was primarily due to drop in consumer spending on both durable (-2.6%) and nondurable goods (-5.5%), business spending on equipment (-2.7%), information processing equipment (-6.2%) and industrial equipment (-5.2%). Residential fixed investment, which includes both home construction and sales also registered a decline of 14 percent. Both federal and state and local government spending also dropped 3.2 and 1.2 percent respectively. However, final sales to private domestic purchasers, an indicator of the underlying strength in overall aggregate demand —remained unchanged in the second quarter, after growing by 3.1 percent in the first quarter. U.S. inflation rate, as measured by consumer price index rose by an annualized 10.5 percent in the second quarter, following a 9.2 percent increase in the first quarter. The forecast for inflation rate calls for a 6.3 percent increase for the third quarter, followed by about 5.0 percent increase in the fourth quarter.
➢ At least a 50 bps rate hike at the September 20-21 FOMC meeting seems likely at this point. U.S. economy will most likely grow by 1.5 percent in 2022, followed by a 1.0 percent rate of growth for 2023. Consumer spending will grow by 2.4 percent in 2022 and 1.9 percent in 2023. Overall business spending will rise 4.5 percent in 2022 and by slightly over 1.0 percent in 2023.
First & Second Quarter 2022
Third Quarter 2022