2012-03-09 / Business

Briefs

by John Temple Ligon

Economic growth in China and U.S.

China expects economic growth of 7.5% this year. Last year, China’s gross domestic product grew by 9.2%, while inflation was 5.4%. For all of 2010, China’s GDP grew by 10.4%. In the U. S. for the fourth quarter of 2011, the economy grew at an annualized rate of 3%, well ahead of the 1.8% growth in the third quarter. For 2011, the U.S. GDP was a total of $15.1 trillion, which was an inflation-adjusted growth of 1.7% from 2010. For 2012, most economists expect feeble growth, maybe 2.3%.

Local outlook

Mike Briggs, president of the Central S.C. Alliance, says economic development in the Midlands is looking good this year. The greater economic growth rate in China coupled with higher inflation is about to take Chinese production costs up to parity with the U.S. within five years. In other words, there will be no price advantage in locating manufacturing plants in China in five years instead of in the U.S. According to economists Doug Woodward of USC’s Moore School, productivity in S.C. has risen 20% in the past 18 years.

BB&T slowed down

Winston-Salem-based BB&T, which is Charlotte’s third-largest bank with local deposits of $5.62 billion, was permanently enjoined by a Delaware judge in a ruling on Monday, February 27. BB&T wanted to buy most of BankAtlantic Bancorp’s banking assets, but the judge said the sale would violate the terms of its trust-preferred securities ( TruPS) corporate debt of $289 million. According to the Charlotte Business Journal, that debt must either be repaid or assumed by the purchaser. In this case BB&T was buying $2.1 billion in assets from BankAtlantic, but was leaving behind $623 million in assets with BankAtlantic, including the $289 million in TruPS, which the judge said had to be either repaid or assumed by BB&T at the closing of the deal. Bottom line: The ruling was in favor of the investors in the TruPS debt and against BankAtlantic, slowing down BB&T, for now.

S.C.-based banks in a recovery mode

For the fourth quarter of 2011, S.C.-headquartered banks made a total profit of $21 million, which was a great improvement over a loss of $111 million in the fourth quarter of 2010 and over a loss of $967 million in 4Q of 2009. Total deposits in the category were almost $50 billion in the fourth quarter of 2009. For the fourth quarter of 2011, total deposits were about $31 billion.

It does happen

The S.C. retirement pension fund investment strategy has been in the news lately, what with S.C. Treasurer Curtis Loftis accusing the fund’s handlers of taking too much risk in hedge funds. Last year the S.C. retirement fund experienced an 18% gain from its investments. The trick is to pick the right hedge funds often enough to override the wrong picks. Consider the Bridgewater Pure Alpha fund, which made $13.8 billion for its investors last year; and the year before, Pure Alpha made a gain of 45%, according to the Financial Times. On the other hand, there were plenty of opportunities to pick the wrong hedge funds last year. Hedge funds taken as a whole lost $123 billion in 2011.

Export

S.C.’s exports totaled more than $26.4 billion in products sold to 198 countries, an increase of 21.4% over last year. S.C. ranked first in tire exports, shipping about 30% of all U.S. made exported tires. S.C. was also ranked first in exports of automobiles to the world, even ahead of Michigan. Spartanburg’s BMW plant is credited with $7.4 billion in export value, making it the country’s leading automotive exporter. S.C.’s biggest customer for 2011 was Germany with about $4 billion in purchases of S.C. products.

Main Street Connectivity Study

The Urban Land Institute provides leadership in the responsible use of land and in creating and sustaining thriving communities. With funding from the U. S. Environmental Protection Agency Brownfield Assessment Grant, the ULI’s S.C. chapter and the City of Columbia studied how to make Columbia’s downtown more accessible to pedestrian and bike traffic. The final report is scheduled for a public presentation at 4:00 p.m. on Tuesday, March 13, at City Hall, corner of Laurel Street and Main Street.

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