Experts: Economy looks good

MONTGOMERY - The Shoals economy was healthy in 2007 and the picture looks even rosier in the years to come, according to economists with the University of Alabama's Center for Business and Economic Research.

Economic growth in the Shoals is "reversing a steep decline in manufacturing seen from the 1990s through at least 2003," the economists said.

Through September 2007, the Shoals gained 1,200 new jobs, ranking fourth among the 11 metro areas, and another 1,800 are expected in the next few years as National Alabama Corp. rail car plant gets under way.

The rail car plant is funded by a $350 million loan from the Retirement Systems of Alabama that also built the Robert Trent Jones Golf Course trail in Colbert County and a Marriott hotel in Florence.

More than 1,000 construction workers will be needed to build the rail car plant.

There were smaller but significant expansions or new industries that earned the Shoals Economic Development Authority the Alabama Development Office's 2007 Economic Development Achievement Award.

Unemployment was higher than the state's average in 2006 but had dropped to 3.3 percent in October because of increased jobs and a declining labor force.

Transportation projects, including the completed four-laning of Alabama 157, the scheduled June completion of the Patton Island bridge corridor and widening of the first part of U.S. 43 from Tennessee should help economic development.

The University of Alabama's Center for Business and Economic Research economic annual report on the state and on metropolitan statistical areas reviews the previous year and attempts to predict future statewide growth.

Center experts say Alabama's economy should grow 2.2 percent this year, just under 10 percent higher than the nation's expected growth of 2 percent.

The center doesn't predict growth rates for particular areas but uses past performance as a guide for a short-term look into the future.

Sam Addy, director and associate research economist for the center, said Alabama's economy remains relatively strong and will see moderate growth this year, making a recession unlikely.

"Fortunately, we can say things are not that bad in Alabama," Addy said.

Another short term and optimistic look came from the president of the Federal Reserve Bank in Atlanta who said he expects a modest national economic recovery in the last half of 2008. That may bode well for Alabama because it still has a growing, vibrant economy that is somewhat insulated from all national economic trends, he said.

Dennis P. Lockhart, president and chief executive officer of the federal bank, said he believes bank disclosures of losses in subprime mortgage-backed securities, securing new investors, and updating risk assessments of related investments should restore consumer and investor confidence and ease worries of a recession and of inflation that is caused by energy and food price increases.

"For 2008, I believe the pivotal question - the central uncertainty - is the extent of current and future spillover from housing and financial markets to the general economy," Lockhart said.

Gov. Bob Riley, who in February will present state budgets to the Legislature, was realistic about even his optimistic outlook for this year.

"Still, we can't let this positive report blind us to the many challenges and uncertainties ahead," said Riley, who used the report to underscore his plan to seek tax cuts in the upcoming legislative session to spur the economy.

The state's growth could be 2.2 percent in 2008, down slightly from the 2.3 percent growth of 2007, and increase to 2.8 percent in 2009.

About 21,000 new jobs are expected to be created this year and another 23,000 in 2009.

Addy said workforce and economic development funding challenges continue, including an under-utilization of the state Capital Improvement Trust Fund that supports business expansion. The other challenge is to continue to emphasize education and economic diversification as a hedge against economic downturns.

Addy said the ceiling of the Capital Improvement Trust Fund, which has a current limit of $750 million, should be about two-thirds or so of the state's $3 billion oil and gas trust fund.

Nigel Gault, group managing director of the North American Macroeconomic Services, said national economic growth is slowing sharply and the risk of a recession is 50 percent.

Dana Beyerle can be reached at (334) 264-6605 or dtb12345@aol.com.