Alabama’s economy is expected to continue to rebound in 2015, bringing better employment levels and job creation in industries as diverse as biosciences and car making. Those are among the predictions of “Alabama Outlook 2015” compiled by the Center for Business and Economic Research (CBER) at the University of Alabama’s Culverhouse College of Commerce.

The prognostications were presented at the 27th Annual Economic Outlook Conference held Jan. 15 at the Renaissance Montgomery Hotel & Spa at the Convention Center. Alabama Power was a sponsor of the conference.

Earlier this year, Chicago-based FreightCar America Inc. announced plans to expand railcar production in Alabama as part of a $10 million project that will create 150 to 200 jobs in Colbert County. *Photo courtesy of www.madeinalabama.com

Among the predictions:

• Alabama’s real economic output (measured as gross domestic product, or GDP) is expected to rise 2.3 percent this year, slightly higher than the approximate 2 percent in 2014.
• Employment could see its greatest increase in any single year this decade, with a projected 1.8 percent increase.
• Lower unemployment numbers will continue. For the most recent month where data is available, November 2014, the state had 6 percent unemployment, its lowest rate in more than six years.
• The Alabama Business Confidence Index, a quarterly measure the CBER takes throughout the state, mirrors the sunny forecast. The ABCI is at 57.4 percent for the first quarter of 2015, its highest point since the recession.
• The ABCI found 60.6 percent of Alabama businesses had better sales than expected in the last quarter of 2014 while 57.8 percent exceeded their expected profits for the same quarter.
• Most companies, according to the ABCI, will be hiring workers and investing more capital this year.

Businesses exercise cautious optimism

Ahmad Ijaz, director of the Economic Forecasting Center at the CBER, said while hiring and capital investment may be returning, business owners still have concerns.

“Businesses are just not sure how sustainable this recovery is,” Ijaz said.

Ijaz said Alabama companies remain concerned about their finances and development, government regulations, finding skilled and qualified workers, the overall economy and healthcare costs related to the Affordable Care Act.

Those concerns are well-founded, Ijaz said, considering after 81 months the state has yet to get back to the number of employed before the recession. It took 44 months to return to pre-recession employment levels following the 2001 recession, while recovery took a fraction of that time after recessions in 1990, 1981 and 1980.

Within Alabama, only the Auburn-Opelika, Huntsville, Tuscaloosa and Florence-Muscle Shoals metro areas have returned to pre-recession employment levels, Ijaz said.

This HS Automotive Alabama Inc. groundbreaking happened in 2013. The company is a Tier I automotive supplier for the Hyundai plant in Montgomery County. Photo courtesy of www.madeinalabama.com.

David Altig, executive vice president and director of research for the Federal Reserve Bank of Atlanta, said the national economic forecast is similarly optimistic, with GDP growth expected to be 3.2 percent this year and 2.9 percent in 2016. Unemployment is expected to be around 5.2 percent by the end of the year, a rate not expected to change in 2016, he said.

The Federal Reserve predicts an interest rate increase could come around the middle of 2015, though low gas prices, continued low wages and the expectation that inflation may not be less of a concern has some officials wondering if rates will warrant an interest rate increase this summer.

Ijaz said Alabama’s economy has transformed from the nondurable goods it once produced to one that primarily produces durable goods. With the ramping up of production at the Airbus plant under construction in Mobile and continue growth in the state’s automotive plants, Ijaz said that trend will continue.

The state’s focus on growing the bioscience industry is paying off not only in new companies in Alabama and others moving here, but in the high wages associated with those jobs, Ijaz said.

Bioscience industry jobs in the state had an annual wage of $65,727 in 2012 compared to the $41,074 average wage for all other private sector industries in Alabama.