Look for State Economy to Grow Next Year; Textiles and Apparel to Remain Gloomy

Alabama’s economy is expected to grow by 3.8 percent in 2004 with real output, the total value of goods and services produced and expressed in 1996 dollars, rising to $121.6 billion, according to Dr. Carl Ferguson, director of the Center for Business and Economic Research at The University of Alabama.

“With the exception of textiles and apparel, real output is forecasted to increase for all industries,” Ferguson said. He said nonagricultural employment should increase by 0.8 percent with the addition of about 15,500 jobs.

“Fewer job gains could be realized if productivity gains continue at the high levels seen in 2003,” he said. “A large share of these new jobs is expected to be in automotive and related industries. These forecasts assume that both monetary and fiscal policies will remain accommodating at least for most of the year and that consumer and business spending continue strongly.”

Ferguson said the Federal Reserve is likely to tighten monetary policy if the economy continues to grow at the third quarter 2003 pace. The forecasts also assume an increase in capital spending by businesses.

Services and trade output are forecasted to rise almost 5 percent. Manufacturing output will rise 4.1 percent. The outlook for manufacturing jobs remains bleak but some of the sector’s industries are forecasted to show a modest recovery. Motor vehicle manufacturing is expected to remain one of the strongest industries in the state; employment in this industry will jump by 4.5 percent or better. Financial activity is expected to increase by 3.2 percent, following a 2.0 percent growth in 2003.