CULVERHOUSE COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Spring 2002 / Volume 71, Number 2
In this issue:
Economic Outlook—Quarterly Update
Spring 2002
3
Selected Economic Indicators
7
Alabama Retail Sales in 2001
8
Birmingham and Mobile: Sharing Common
and Complementary Economic Interests
10
Alabama Business Leaders Confidence Index
Second Quarter 2002
12
THE UNIVERSITY OF
ALABAMA
B U S I N E S S
This report is also available in PDF format on the
Internet at
http://cber.cba.ua.edu
The Center for Business and Economic Research has
available at this site downloadable data on various
topics including population, retail trade, and
employment. Research briefs are also available.
CENTER FOR BUSINESS AND ECONOMIC RESEARCH
Alabama Business
Associate Dean for Research
and Technology
Carl Ferguson
Associate Director
Samuel Addy
Assistant Directors
Deborah Hamilton
Annette Jones Watters
Authors
Ahmad Ijaz
Carolyn Trent
Graphic Design
Sherry Lang
Addtional Contributors
Deborah Hamilton
Sunja Park
Available Now!
Profiles of general demographic characteristics
from Summary File 1 of Census 2000 for
geographies in Alabama.
The six-page profiles present Census 2000 data
on age and sex distribution, race, Hispanic
origin, household relationship and type, and
housing occupancy and tenure (whether the
housing unit is owned or rented). The profiles
include 27 tables with hundreds of data items,
plus percentage distributions.
The CD-ROM product presents profiles of the
entire state, all counties, places, and census tracts
in the state. It contains easy-to-use retrieval
software.
To order Alabama Census 2000 Demographic
Profiles from Summary File 1 on CD-ROM send
name and address along with your $35.00 check
or money order to Center for Business and
Economic Research, Box 870221, Tuscaloosa,
Alabama 35487-0221. Please make checks
payable to The University of Alabama.
Alabama Business is a quarterly publication of
the Center for Business and Economic
Research, Culverhouse College of Commerce
and Business Administration, The University of
Alabama.
Articles reflect the opinions of the authors, but
not necessarily those of the staff of the Center,
the faculty of the Culverhouse College of
Commerce, or the administrative officials of
The University of Alabama.
All correspondence should be addressed to:
Editor, Alabama Business, Center for Business
and Economic Research, The University of
Alabama, Box 870221, Tuscaloosa, Alabama
35487-0221.
For information on the Center for Business and
Economic Research, the Culverhouse College
of Commerce and Business Administration or
The University of Alabama:
http://cber.cba.ua.edu
http://www.cba.ua.edu
http://www.ua.edu
CBER
Gross Domestic Product
Annual Percent Change
Over Same Quarter Previous Year, 1996 Dollars
Economic Outlook
Spring 2002
6
5
United States
Overview. We have recently emerged from one of
the mildest downturns in post-war history. The
peak-to-trough drop in real Gross Domestic Product
(GDP) during this recession was only 0.3 percent,
compared to the 1.5 percent drop during the 1990-91
recession and the 2.9 percent decline in 1981-82.
Although national manufacturing activity remains
generally weak, most economic indicators now point
toward a very strong first half of 2002. The U.S.
economy grew at a rate over 5.8 percent in the first
quarter of 2002 and is expected to grow by 3.4
percent in the second quarter. The rate of growth for
the whole year is now expected to be around 2.5
percent, up from 1.8 percent in our last forecast. We
believe a sustainable recovery in the U.S. economy is
underway.
4
3
2
1
0
1
6
99
/Q
1
1
6
99
/Q
4
1
7
99
/Q
3
1
8
99
/Q
2
1
9
99
/Q
1
1
9
99
/Q
4
2
0
00
/Q
3
2
1
00
/Q
2
2
2
00
/Q
1
2
2
00
/Q
4
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
Consumer Expenditures
Annual Percent Change
Over Same Quarter Previous Year, 1996 Dollars
6
5
4
Employment and Productivity. Employment
declines were newsmakers during this recession, but
they were less severe than in previous recessions.
However, unemployment hit different sectors of the
economy differently. We had the worst downturn
for manufacturing in nearly two decades and states
like Alabama, with a high concentration of manufacturing industries, were hit exceptionally hard.
The weakness in payroll employment seems to be
subsiding. Working hours are increasing and layoffs
are slowing down. Temporary employment has
begun to increase, signaling that layoffs may be
bottoming out. Nevertheless, total payroll
employment is expected to remain weak at least
through the rest of this year.
Most economic growth in 2002 will come from
increased productivity, which has remained strong
throughout the recession, rather than from increased
employment. Productivity gains will also boost
corporate profits, which could lead to higher
business spending and new hiring. The strong
growth in the first quarter followed at the heels of
rapid inventory depletion in the previous three
quarters.
Consumer and Housing Markets. The housing
market and consumer spending kept the most recent
3
2
1
0
19
96
/Q
1
19
96
/Q
4
19
97
/Q
3
19
98
/Q
2
19
99
/Q
1
19
99
/Q
4
20
00
/Q
3
20
01
/Q
2
20
02
/Q
1
20
02
/Q
4
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
recession mild. Although consumer spending
slipped slightly after the 9/11 attacks, it recovered
rather quickly. Overall consumer spending actually
grew by 3.1 percent in 2001, with retail spending on
automobiles leading the surge. Consumers
continued their pace of spending into the first
quarter of 2002, with real non-auto retail sales
increasing 10 percent in the first quarter of 2002, the
largest increase in nearly two years. Consumer
spending is expected to remain fairly strong through
2002, according to The Conference Board’s index of
consumer confidence. However, consumers could
slow down their spending levels, since consumer debt
never declined during the downturn. But as long as
the employment situation continues to stabilize and
energy prices do not rise significantly, consumer
spending is expected to continue on its current trend.
3
Industrial Production Index
Annual Percent Change
Over Same Quarter Previous Year, 1992=100
10
5
0
-5
-10
9
19
6/
Q
1
9
19
6/
Q
4
9
19
7/
Q
3
9
19
8/
Q
2
9
19
9/
Q
1
9
19
9/
Q
4
0
20
0/
Q
3
0
20
1/
Q
2
0
20
2/
Q
1
0
20
2/
Q
4
Source: U.S. Department of Commerce, DRI-WEFA, and Center for
Business and Economic Research, The University of Alabama.
Because of a mild winter and attractive mortgage
rates, the housing sector has also remained strong in
recent months. After posting unexpectedly strong
gains throughout 2001, real construction spending
increased by 6 percent in the first quarter of 2002.
With mortgage rates gradually inching higher, there
is a chance we could see some slowdown in the
housing markets.
Industrial Production. The manufacturing sector,
which was hit particularly hard by the economic
downturn, remains weak. After declining for almost
18 months, manufacturing activity is showing some
signs of improvement. The industrial production
index has increased three months in a row, and the
capacity utilization rate has also started edging
upward, after falling to an 18 year low. The Institute
of Supply Management (ISM) index has shown
increases three months in a row. An index value of
over 50.0 indicates an expanding manufacturing
sector. After increasing to 58.7 in February, the ISM
index read 57.3 in March. However, there is bad
news as well as good news. U.S. manufacturing
industries lost almost 800,000 jobs last year, and even
though industrial production is beginning to recover,
new jobs are not expected to be added in the near
future. Most of the increased demand will be met by
increases in productivity and an increase in the
number of hours worked by existing employees.
Business Fixed Investment. A decline in business
investment spending was one of the factors that
caused the economy to slow down. The most severe
drops were experienced in equipment and software,
computers, and communications equipment.
4
Investment in telecommunications equipment
experienced declines of over 25 percent in each of
the last two quarters of 2001. Business investment
spending will have to increase in order for the
economic recovery to be on a solid footing. A
recovery based merely on consumer spending would
be lackluster and mild. However, business spending
is not expected to improve in the short run unless
profitability improves. The Job Creation and
Worker Assistance Act of 2002, passed in early
March, provides an instantaneous depreciation
allowance of 30 percent on business investments
made within three years of September 11, 2001.
Effectively, the act changes the timing of when
businesses can write off investment expenses, and it
changes the after tax cost of capital, since a dollar
today is worth more than the same dollar two or
three years from now. In our current forecast,
investment spending is not expected to improve until
2003.
Outlook There are some risks that could cause the
economy to dip into another downturn. We worry
mainly that consumer debt levels are still high,
energy prices are relatively high or rising, and payroll
employment is not improving. However, in our
opinion, the U.S. economy is on a stable path to a
sustainable recovery because of consumers’
confidence in the economy, governmental fiscal
stimulus packages, and high levels of defense-related
spending. As far as rising energy prices are
concerned, it is not really a supply/demand issue but
rather the uncertainty of political events in the
Middle East. Furthermore, some OPEC members
have in essence agreed to cover any shortfall in oil.
It is certainly not in OPEC’s interest to shortchange
any sort of global economic recovery that may be
underway.
Alabama
Employment. From February 2001 to February
2002, the state’s economy lost 14,300 jobs. Retailing
lost 1,600 jobs during this period, an indication that
even though consumer spending has stayed at high
levels, retailers are struggling with profitability.
Alabama’s retailers are experiencing a nationwide
trend brought on by overcapacity and overbuilding
that took place in the late 1990s. The only Alabama
sector that seems to be coming out of recession is the
services sector, which added 4,300 jobs from
February 2001 to February 2002. State and local
Alabama Total Wholesale and
Retail Trade Employment
Annual Percent Change
Over Same Quarter Previous Year
Alabama Total Nonagricultural Employment
Annual Percent Change
Over Same Quarter Previous Year
2.4
4
1.8
3
1.2
2
0.6
1
0
0
-0.6
-1
-1.2
-2
3 4
/Q
/Q
/Q
/Q
/Q
/Q
/Q /Q
/Q
/Q
/Q
/Q /Q
96 996 997 997 998 998 999 999 000 000 001 001 002
9
1
1
1
1
1
1
1
1
2
2
2
2 2
1
3
1
3
1
3
1
3
1
3
1
Source: Estimates based on Alabama Department of Industrial Relations data.
9
19
6/
Q
9
19
6/
Q
3
9
19
7/
Q
1
9
19
7/
Q
3
9
19
8/
Q
1
9
19
8/
Q
3
9
19
9/
Q
1
9
19
9/
Q
3
0
20
0/
Q
1
0
20
0/
Q
3
0
20
1/
Q
4
3
/Q /Q
01 002
0
2
2
1
Source: Estimates based on Alabama Department of Industrial Relations data.
governments also added 2,900 jobs during this
period.
Manufacturing and Other Goods Producing
Sectors. Goods-producing businesses in Alabama
account for almost 18 percent of employment in the
state, and they have been the hardest hit during the
most recent downturn. The manufacturing sector
has actually been in a recession since mid-2000.
From February 2001 to February 2002, manufacturing firms in Alabama lost 15,700 jobs. These
losses were spread across every subgroup in the
overall manufacturing category, except one. The
only manufacturing industry that gained jobs during
this period was transportation equipment manufacturing, adding 2,300 new jobs. This group
includes both automobile manufacturing and
defense-related equipment. The recent economic
slowdown was spread pretty much across the world,
making it difficult for manufacturers to sell products
overseas. The total value of goods and services
produced by the state’s manufacturing firms declined
by 3.2 percent in 2001, totaling $21.3 billion.
1
Alabama Total Manufacturing Employment
Annual Percent Change
Over Same Quarter Previous Year
0
-1
-2
-3
-4
-5
-6
-7
19
/
96
Q
1
19
/
96
Q
3
19
/
97
Q
1
19
/
97
Q
3
19
/
98
Q
1
19
/
98
Q
3
19
/
99
Q
1
19
/
99
Q
3
20
/
00
Q
1
20
/
00
Q
3
20
/
01
Q
4
3
/Q 2/Q
1
0
0
20 20
1
Source: Estimates based on Alabama Department of Industrial Relations data.
Alabama Total Services Employment
Annual Percent Change
Over Same Quarter Previous Year
6
5
Construction and Mining. The commercial
construction sector was flat in 2001, and from
February 2001 to February 2002 showed no change
in employment. Due to a drop in energy prices in
2001, the mining industry in the state was not able to
grow and experienced essentially flat employment.
4
Service Producing Sectors. Despite relatively stable
consumer spending, retailing has been losing jobs.
The Birmingham metro area, the largest retailing
center in the state, has recently lost almost 2,000 jobs
0
3
2
1
1
6
99
/Q
1
1
6
99
/Q
3
1
7
99
/Q
1
1
7
99
/Q
3
1
8
99
/Q
1
1
8
99
/Q
3
1
9
99
/Q
1
1
9
99
/Q
3
2
0
00
/Q
1
2
0
00
/Q
3
2
1
00
/Q
4
3
Q Q
1/ 002/
0
20 2
1
Source: Estimates based on Alabama Department of Industrial Relations data.
5
directly related to wholesale and retail trade. With
only marginal profitability, retailing firms are
exerting pressure on their suppliers to reduce costs,
which in turn is forcing manufacturers to either lay
off workers or relocate to lower wage countries. We
have seen those relocations among apparel
manufacturers. The total value of goods and services
produced by wholesale and retail firms in the state
declined by 1.8 percent in 2001.
After losing jobs in 2001, the services sector in the
state is on a path to a moderate recovery. From
February 2001 to February 2002, the services-related
businesses in the state added 4,300 new jobs, far
below the average level of 8,000 to 10,000 jobs that
were being added annually prior to the economic
Alabama Nonagricultural Employment
Change in Number of Jobs
February
February
2000
2000 to
to
February
February
2001
2001
Total Nonagricultural
Mining
Construction
Manufacturing
Durable Goods
Lumber Products
Primary Metals
Fabricated Metal
Industrial Machinery
Electrical Machinery
Transportation Equipment
Stone, Clay and Glass
Nondurable Goods
Food Products
Textile Mill Products
Apparel
Paper and Pulp Products
Printing and Publishing
Chemicals
Rubber and Plastics
TCPU
Wholesale and Retail Trade
FIRE
Services
Hospitals
Total Government
Federal Government
State Government
State Education
Local Government
Local Education
16,200
-500
3,900
-7,900
-6,100
-1,000
-2,300
-200
-1,800
1,000
-1,400
0
-1,800
1,500
-900
-2,100
-500
300
-400
300
3,400
6,800
900
10,000
0
1,200
-1,400
1,200
1,000
1,400
-200
February
February
2001
2001 to
to
February
February
2002
2002
-14,300
0
0
-15,700
-5,800
-300
-2,000
-800
-2,200
-2,000
2,300
-300
-10
0
-1,300
-3,800
-1,400
-800
-1,200
-1,400
-5,000
-3,400
600
4,300
700
2,700
-200
2,300
1,400
600
-800
Source: Alabama Department of Industrial Relations.
6
downturn, but better than the declines seen in other
sectors. Despite such moderate gains in
employment, the total value of goods and services
produced by services-related businesses in the state
increased by 1.1 percent.
Other Sectors. While transportation,
communications, and public utilities all lost jobs
from February 2001 to February 2002, finance and
real estate-related businesses added 600 new jobs
during the same period.
Tax Revenues. Payroll declines in Alabama
continue to affect the state’s tax revenues. During
the first two quarters of the current fiscal year, total
tax revenues dropped by 0.4 percent, almost $12
million below last year’s level. Sales tax revenues,
which largely depend on consumer spending,
increased by 1.3 percent. From September 2001 to
March 2002, individual income tax revenues totaled
$1.064 billion, almost $28 million below last year’s
levels. Appropriations made to the Alabama
Education Trust Fund during the first two quarters of
the current fiscal year increased by 0.32 percent, or
by $6.3 million. However, appropriations to the
state’s General Fund declined by 2.3 percent, or by
approximately $12 million, during the first two
quarter of the current fiscal year over the first two
quarters of the previous fiscal year.
Economic Outlook. After declining by 0.2 percent
in 2001, Alabama’s economy is expected to grow by
1.5 percent in 2002. Of course, this forecast depends
on how fast the manufacturing sector begins to
recover. In our view, the sector could start turning
around by late 2002, barring any shock like a sharp
increase in energy prices, which is highly unlikely.
Even if manufacturing as a whole begins to recover,
both textiles and apparel manufacturing, which
employ almost 53,000 people, are not expected to
recover anytime soon. The apparel industry in
particular is under pressure from both retailers and
competition. Alabama’s apparel makers will
continue to lose jobs in the near future.
Overall, the state is expected to add approximately
5,000 new jobs, a 0.3 percent annual growth rate.
While manufacturing will remain flat, both services
and trade will show considerable improvement this
year. State tax receipts are expected to increase by
1.8 percent for the current fiscal year, approximately
$105 million over the previous fiscal year.
Ahmad Ijaz
Selected Economic Indicators
United States
Gross Domestic Product (billions)
Percent Change
30-Year Treasury Bond Rate
3-Month Treasury Bill Rate
Consumer Price Index
Inflation Rate
Housing Starts (millions)
Percent Change
Total Employment (millions)
Percent Change
Unemployment Rate
Alabama
Total Nonagricultural
Employment (thousands)
Percent Change
Total Manufacturing
Employment (thousands)
Percent Change
Durable Goods Manufacturing
Employment (thousands)
Percent Change
Nondurable Goods Manufacturing
Employment (thousands)
Percent Change
Total Wholesale and Retail Trade
Employment (thousands)
Percent Change
Total Services Employment (thousands)
Percent Change
Alabama Unemployment Rate
Initial Benefit Claims (thousands)
Manufacturing Weekly Hours
Total Tax Revenues (millions)
Percent Change
Total Income Tax Revenues (millions)
Percent Change
Total Sales Tax Revenues (millions)
Percent Change
2000/Q3
2000/Q4
2001/Q1
2001/Q2
2001/Q3
2001/Q4
9,260.1
4.4
5.8
6.0
173.0
3.5
1.5
-8.8
135.0
1.1
4.0
9,303.9
2.8
5.7
6.0
174.2
3.4
1.5
-7.0
135.6
1.0
4.0
9,334.5
2.5
5.4
4.8
175.9
3.4
1.6
-2.5
135.8
0.6
4.2
9,341.7
1.2
5.7
3.7
177.3
3.4
1.6
2.3
135.2
0.0
4.5
9,310.4
0.5
5.5
3.2
177.6
2.7
1.6
6.4
134.8
-0.1
4.8
9,348.6
0.5
5.3
1.9
177.5
1.9
1.6
2.6
134.3
-1.0
5.4
2000/Q3
2000/Q4
2001/Q1
2001/Q2
2001/Q3
2001/Q4
1,932.3
0.5
1,948.6
0.6
1,926.3
0.6
1,928.1
-0.6
1,910.5
-1.1
1,917.5
-1.6
361.3
-1.4
357.8
-1.8
352.1
-2.6
348.3
-4.0
344.0
-4.8
338.7
-5.3
193.7
-1.5
191.4
-2.5
188.2
-3.7
185.7
-5.3
183.3
-5.4
181.6
-5.1
167.6
-1.2
166.4
-1.0
163.9
-1.3
162.5
-2.6
160.7
-4.1
157.0
-5.6
447.2
-0.1
475.7
3.0
4.6
25.7
41.8
1,441.1
-0.6
617.4
-5.0
378.2
1.0
455.9
0.8
476.7
3.1
4.6
28.0
41.7
1,351.6
-0.2
541.9
-2.6
381.4
-0.7
445.5
1.5
472.9
2.2
5.0
37.0
41.0
1,471.2
-6.8
621.2
-1.1
370.2
-3.5
446.5
-0.1
477.1
1.0
4.8
28.0
40.6
1,730.5
2.8
832.2
-3.9
381.2
-0.8
442.9
-1.0
477.7
0.4
4.9
29.1
40.5
1,452.0
0.8
622.7
0.9
380.3
0.6
444.0
-2.6
478.4
0.4
5.5
31.5
40.7
1,311.6
-3.0
510.5
-5.8
389.7
2.2
Note: All percent changes indicate change over same period of the previous year.
Source: U.S. Bureau of Labor Statistics, U.S. Department of Commerce, Alabama Department of Industrial Relations,
Alabama Department of Revenue, and Center for Business and Economic Research, The University of Alabama.
7
Alabama Retail Sales
in 2001
Alabama retail sales managed a gain of 1.5 percent in
2001. Taxable sales totaled $41.1 billion, up from
$40.5 billion in 2000. The increase for the year was
largely due to strong consumer spending in the wake
of September 11 that helped bolster the economy
during the last three months of 2001. Total retail
sales were up 8.3 percent during the fourth quarter
compared to the same three months of 2000.
Looking back over the year, first quarter 2001 retail
sales were 3.6 percent below the relatively robust first
quarter of 2000. Total Alabama retail sales were up
less than one percent in the second and third
quarters of 2001 compared to a year ago.
Monthly Alabama Taxable Retail Sales
the year that saw sales from January to July 2001
between 6 and 15 percent below sales for the same
months of 2000. However, sales at eating places
sagged during September and October 2001 as more
Alabamians stayed at home, but rebounded in
November to gain 3.4 percent overall for the year.
Grocery store sales were strong throughout 2001,
amounting to 15.9 percent of all retail sales in
Alabama and posting an annual gain of 9.0 percent.
Weakness in sales of general merchandise during
February through June held the sector’s increase to
just 2.6 percent for the year. General merchandise
accounted for 16.1 percent of Alabama’s 2001 retail
sales. Apparel stores managed a 2.1 percent increase
in 2001, largely due to strong fourth quarter sales.
The lumber and hardware store category, which also
includes mobile home dealer sales, struggled for
most of the year, but also posted higher fourth
quarter sales than a year ago.
(Thousands of Dollars)
Retail Sales Share by Kind of Business
for Alabama, 2001
$3,950,000
$3,750,000
Misc. Retail
9.3%
2001
$3,550,000
Nonretail and Unclassified
10.9%
Eating Places
10.0%
$3,350,000
Food
15.9%
2000
$3,150,000
$2,950,000
Hardware and
Lumber
8.2%
$2,750,000
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Source: Center for Business and Economic Research, The University of Alabama
Strong sales of new vehicles were a major contributor
to the fourth quarter surge in total retail sales. The
automotive sector is a huge component of retail
sales—in 2001 automotive sales accounted for 20.3
percent of the statewide total. Dealer incentives and
zero percent financing spurred motor vehicle
purchases late in 2001, with the result that monthly
auto sales for the October through December period
were an average of 22.8 percent higher than monthly
sales a year ago. Automotive sector sales had been
below or just barely above corresponding 2000 sales
for the first nine months of the year.
A heightened emphasis on the home boosted
furniture sales—monthly sales were up an average of
18.2 percent during the last three months of 2001
compared to 2000. This contrasted with a depressed
market for furniture and home furnishings earlier in
8
Gas Service
Stations
0.7%
Automotive
20.3%
General Merch.
16.1%
Furniture
4.6%
Apparel
4.2%
Source: Center for Business and Economic Research, The University of Alabama.
Retail Sales in Alabama’s
Metro Areas
Alabama’s 11 metropolitan areas accounted for 71.1
percent of all retail sales in the state in 2001. Metro
area sales totaled $29.3 billion. The Birmingham
MSA claimed 22.6 percent of total sales, while 12.1
percent of sales were transacted in the Mobile metro
area. Retail sales per capita varied from highs of over
$10,000 per resident in Huntsville, Dothan, and
Birmingham to just under $7,000 in AuburnOpelika. Higher per capita retail sales are indicative
of an area’s ability to draw shoppers from outside the
area.
Metro Area Retail Sales Per Capita 2001
Alabama
Retail Sales Data Series
$9,216
Anniston
$8,761
Auburn-Opelika
The Center for Business and Economic Research
(CBER) at The University of Alabama has
maintained a retail trade data series for Alabama for
over 50 years. Taxable retail sales are extracted from
monthly sales data provided to the Center by the
Alabama Department of Revenue. Data are tallied as
total sales and ten component categories for the
state, MSAs, and counties. Calculation of retail sales
for MSAs and counties depends on allocating sales
for multi-county firms to counties based on a
periodic disaggregate survey conducted by the
Department of Revenue. The most recent
disaggregate survey applies to sales from 2000
forward. All retail sales data are reported in current
dollars. Monthly summary data are posted to the
$6,723
Birmingham
$10,018
Decatur
$8,646
Dothan
$10,062
Florence
$9,671
Gadsden
$8,848
Huntsville
$10,718
Mobile
$9,131
Montgomery
$8,934
Tuscaloosa
$9,435
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Source: U.S. Census Bureau and Center for Business and Economic Research, The University of Alabama.
CBER website, http://cber.cba.ua.edu, under Data,
then Alabama Business.
Carolyn Trent
Alabama Taxable Retail Sales by Kind of Business, 1997-2001
(Thousands of Dollars)
1997
1998
1999
2000
2001
Food
Percent Change
5,567,685
5,687,890
2.2
5,721,208
0.6
5,998,657
4.8
6,540,830
9.0
General Merchandise
Percent Change
5,388,342
5,932,950
10.1
5,563,706
-6.2
6,465,780
16.2
6,630,954
2.6
Apparel
Percent Change
1,367,249
1,470,101
7.5
1,666,808
13.4
1,677,465
0.6
1,711,950
2.1
Furniture
Percent Change
1,797,938
1,880,896
4.6
1,925,086
2.3
1,899,279
-1.3
1,910,428
0.6
Automotive
Percent Change
6,645,858
7,182,797
8.1
7,818,938
8.9
8,008,261
2.4
8,342,477
4.2
281,988
285,734
1.3
274,479
-3.9
285,829
4.1
276,168
-3.4
Hardware and Lumber
Percent Change
3,428,384
3,713,724
8.3
4,010,502
8.0
3,663,992
-8.6
3,353,905
-8.5
Eating Places
Percent Change
3,449,980
3,658,911
6.1
3,847,971
5.2
3,967,820
3.1
4,104,477
3.4
Miscellaneous Retail
Percent Change
3,127,830
3,245,942
3.8
3,864,518
19.1
3,769,776
-2.5
3,806,368
1.0
Nonretail and Unclassified
Percent Change
4,692,899
4,836,181
3.1
5,009,854
3.6
4,801,944
-4.2
4,465,253
-7.0
35,748,153
37,895,126
6.0
39,703,070
4.8
40,538,803
2.1
41,142,810
1.5
Gas Service Stations
Percent Change
Total Sales
Percent Change
Source: Center for Business and Economic Research, The University of Alabama.
9
Birmingham and Mobile:
Sharing Common and
Complementary Economic Interests
What do Birmingham and Mobile—Alabama’s largest
metropolitan areas—have in common? A similar
employment distribution for one thing, with strong
concentrations in services; construction; and
transportation, communications, and public utilities
(TCPU) and below-average employment shares in
government and manufacturing. (In fact, at 10.5
percent, manufacturing’s share of nonagricultural
employment for both Birmingham and Mobile in
2001 was the lowest in the state.) There are
commonalities in major industries as well. A list of
major industries by MSA identifies medicine and
research, construction, and electronics and
telecommunications in order as the top industries for
each area, followed by various manufacturing
segments. Population patterns are another similarity,
with a slow-growing urban county encompassing a
stagnant or declining central city melded with
fast-growing suburban counties.
Then what are the differences? Birmingham is the
financial capital of Alabama, while Mobile lags the
state average in finance, insurance, and real estate
(FIRE) jobs. Mobile has a unique position as a leader
in shipping with the Port of Mobile. Total population of the Mobile MSA was about 59 percent that
of Birmingham in 2001. However, even with more
residents, the Birmingham metro area has long
provided more jobs than labor force, drawing
workers from outside the area and keeping
unemployment well below the state average. The
Mobile area, on the other hand, has fewer jobs than
available workers, forcing some to seek work outside
10
the area and keeping unemployment around the state
average. Differences in economic opportunities
result in income discrepancies as well. At $52,700,
median family income in the Birmingham MSA
ranked third in Alabama for FY2002, while Mobile’s
$45,100 ranked eighth among the state’s 11 metro
areas.
Let’s look more closely at some aspects of the
Birmingham and Mobile economies, focusing on the
interactions between the two. Birmingham is home
to Alabama’s four largest banks in terms of assets,
while Mobile’s largest bank ranked 31st on assets at
year-end 2000. Mobile is thus an important market
for Birmingham financial institutions. While
SouthTrust, Regions, AmSouth, and Compass banks
had 142 offices in the Birmingham metro area in
March 2002, they also counted 95 Mobile area
offices.
Mobile has suffered the loss of corporate headquarters, including Delchamps, in recent years.
Looking at Alabama’s publicly traded companies in
2001, the Birmingham metro area was headquarters
to 26, while Mobile claimed only three. And among
Alabama’s top 100 private companies as tallied in
November 2001, 37 were headquartered in the
Birmingham MSA compared to five in the Mobile
area. In retailing, Birmingham-based Saks Inc. has
both Parisian and McRae’s stores in Mobile. And
Bruno’s operates eight Bruno’s and nine Food World
grocery stores in the Mobile metro area.
The Alabama Industrial Directory for 1999-2000
includes 156 Birmingham area mining and
manufacturing firms and 78 Mobile area firms with
over 100 employees. Mobile claims a higher
percentage of large manufacturers categorized as
hi-tech, at 23.1 percent of these firms compared to
16 percent of Birmingham area firms. Many industry
groups are prominent in both metros, including
electrical and electronic equipment, transportation
equipment, and machinery manufacturing. While
Mobile has some presence in industries such as
primary iron and steel, fabricated metal products,
printing and publishing, and stone and clay
products, these are dominant industries in the
Birmingham MSA. In contrast, the heaviest
concentration of large firms in the Mobile area is
in chemicals and fiber manufacturing, while
Birmingham has no large manufacturers in this
sector. Mobile is also more heavily weighted in
lumber and wood products industries and in
transportation equipment, where an emphasis on
shipbuilding goes along with its coastal location.
Proximity to port facilities makes the Mobile area a
prime location for firms that export and/or import.
In the Mobile metro area, 59 percent of the 78 large
manufacturing firms export, while 38.5 percent
import. Shares in the Birmingham MSA are
lower—53.8 percent of large manufacturers export
and 31.4 percent import. Foreign investment is also
pronounced in Mobile—18 firms, or 23.1 percent, are
foreign-owned. This compares to just 6.4 percent of
the 156 Birmingham manufacturing firms with over
100 employees.
originating in the Birmingham area and 92 percent of
the tonnage originating in Mobile went out through
the Port of Mobile in 1999. But looking at
containerized cargo, just 3.4 percent of the Twenty
feet Equivalent Units (TEUs) exported from
Birmingham traveled via the Port of Mobile, while
17 percent of Mobile area containerized shipments
took that route.
Both the Birmingham and Mobile economies have a
sizeable tourism and travel component. In fact, the
top three counties in Alabama in terms of estimated
total visitors in 2000 were Baldwin with over 3.5
million, Jefferson with over 2.7 million, and Mobile
with just under 2.5 million. Travel-related industries
directly employed about 30,800 in the Mobile MSA
in 2000 and 20,000 in the four-county Birmingham
metro area. Travel-related total earnings (both direct
and indirect) amounted to almost $837 million in
Mobile and over $544 million in Birmingham in
2000. Tourist interaction between the two areas is
likely to flow in the Birmingham-to-Mobile
direction. In fact, a 2000 survey found tourists at
Gulf Coast beaches in Baldwin County drove an
average of 279 miles—about the distance from
Birmingham to Gulf Shores/Orange Beach.
Then do the inputs and outputs of these global
economies flow through the Port of Mobile, yielding
a strong transportation linkage between the two
areas? That depends on the type of cargo, according
to a recent study of port usage. In tonnage of bulk
shipments, about 72 percent of exports by vessel
Thus, Alabama’s largest metro areas, Birmingham
and Mobile, present a mix of commonalities,
differences, and complementary economic
emphases—with room for increased future
interactions.
Carolyn Trent
11
Alabama Business
Leaders Confidence
Index
BLCI
100
80
70
60
50
Second Quarter 2002
40
Expectations for the national and state economies as
well as industry sales, profits, hiring plans, and
capital expenditures are combined into the Business
Leaders Confidence Index. During March 2002,
Alabama panelists completed the online survey that
is used to derive the BLCI for the second quarter.
Panelists this quarter represented all major industry
groups in a broad spectrum of businesses statewide.
20
Alabama business leaders’ expectations correctly
anticipated the economic recovery that took hold
during the first quarter of 2002. The consensus
expectations for second quarter 2002 are more robust
than those measured in the inaugural first quarter
index. Business leaders expect strong overall
economic improvement compared to the previous
quarter, as evidenced by a BLCI of 63. A BLCI of 50
is neutral. Economic conditions in Alabama are also
expected to be better than a year ago, with a BLCI of
57 for the second quarter of 2002 compared to the
second quarter of 2001.
Responses of the BLCI panelists signal growth and
recovery in every component of the index during the
second quarter. Three out of four Alabama business
leaders expect the U.S. economy to strengthen in the
The University of Alabama
Center for Business and Economic Research
Box 870221
Tuscaloosa, Alabama 35487-0221
Address service requested.
vs. previous quarter
vs. same quarter year ago
90
63
54
57
45
30
10
0
Q1
2002
Q2
2002
second quarter, while 59 percent anticipate at least
moderate recovery in the Alabama economy. Over
72 percent forecast industry sales above first quarter
levels. Profits should generally improve during the
quarter, with 56 percent of panelists expecting profits
in their industry to be up from first quarter levels.
Although hiring generally lags a recovery, one third
of panelists foresee moderate increases in hiring
during the quarter, while 58 percent anticipate no
change in hiring plans. Business leaders expect to be
cautious about increasing capital expenditures, with
47 percent forecasting no change. Still, 43 percent
see capital spending in their industry rising during
the second quarter.
The Business Leaders Confidence Index is developed
in partnership between Compass Bank and the
Center for Business and Economic Research.
Complete BLCI results can be found at
http://blcindex.cba.ua.edu.
Carolyn Trent
Nonprofit Organization
U.S. Postage Paid
Permit Number 16
Tuscaloosa, AL 35401