Alabama is Better Positioned than Most to Weather an Economic Storm
March 3, 2008
Now we can. While we still have our established economic engines like agriculture and traditional manufacturing jobs, our state economy has diversified, and it has spurred tremendous growth.
Over the past fifteen years, Alabama has become an integral part of the national and worldwide economy. No other state has brought in more major automotive manufacturers, their parts suppliers, and the jobs that accompany them. Starting with Mercedes, then Honda, Toyota, and Hyundai, these international manufacturers have transformed our state’s economy, and the products coming off the assembly line are shipped all over the country and around the world.
The medical sector in Birmingham, the research labs, clinics, and hospitals now employ more people than the steel industry did in its heyday. People come from all over to be treated here, and the discoveries made in pharmaceuticals, biotech and medical procedures are exported in products around the world.
Tourism, aerospace, military support and contracting, and many other sectors of the economy have grown here in the last decade. Our economy is truly varied, and fully connected to the world beyond our state lines. It has brought us progress and more prosperity than we have ever had before.
But being fully integrated into the worldwide economy also has its risks. Now we must concern ourselves with issues and economics outside our state, and outside the South.
While it hasn’t hit as here as bad as in other states, the housing bubble that burst in places like California and Virginia will reduce our exports of building supplies like lumber and plywood. However, there wasn’t the same unsustainable run up in housing prices here as elsewhere. While foreclosures are creeping up, Alabama’s default rate is nowhere near what other states are seeing. That is a good sign.
There are other indications that Alabama may be better prepared than most states to weather a national economic recession. The diversified economy is one. Our unemployment rate continues to remain at historic lows.
There are approximately $8 billion to $10 billion in construction projects slated or already underway throughout the state. The two largest are the ThyssenKrupp steel plant north of Mobile and the National Alabama Corp. railroad car plant in the Shoals. Work has started in these multi-billion dollar projects and will increase in the next couple of years. The state has been able to invest $750 million in economic development that has yielded growth in existing and new industries, from the expansion of Goodyear in Gadsden to the seaport in Mobile. Moreover, there is close to $1 billion in new school construction about to begin in every county in the state after voters approved a bond issue last year.
You know we’ve come a long way when our state is in a better position than high economic flyers like California. We even have a balanced state budget, unlike the Golden State. Let’s hope that the problems with sub-prime mortgages, housing busts, and dubious transactions on Wall Street don’t pull us into an extended downturn. Even when things are going relatively well here, we still rely on economic growth elsewhere to fuel our prosperity. But the infusion of construction jobs, business expansion, and spending may be just the ticket to keep the state economy moving and weather any downturn. Welcome Alabama to the global economy.