AlabamaBusiness
Center for Business and Economic Research, Culverhouse College of Commerce, The University of Alabama
Volume 73, Number 2
Economic Outlook:
2nd Quarter 2004
United States
Overview. The U.S. economy grew at a
solid 4.1 percent annualized rate in the
fourth quarter of 2003, fueled mainly
by consumer expenditures, exports, increased spending on equipment and
software, and housing markets. Economic growth is expected to be as
strong or better in the first half of 2004.
Growth rates of 4.5 percent in the first
quarter and 4.6 percent in the second
quarter are expected, fueled mainly by
tax refunds and improving employment
conditions. Payroll employment seems
to be rebounding, with a strong showing
in March and a significant slowdown in
layoffs. However, the lack of widespread
employment gains, particularly in
the manufacturing sector, remains
a concern.
Economic growth in the second half of
2003 showed the fastest back-to-back
quarterly increase since the first two
Second Quarter 2004
quarters of 1984. Another
encouraging sign about the
recovering economy is the
significant increase in business spending in recent
months—spending on equipment and software grew
14.9 percent in the fourth
quarter, following a 17.6
percent rise in the third
quarter. However, business
spending on plants and
buildings declined again
in the fourth quarter and
could remain weak through
2004. Consumer spending,
which rose 3.2 percent in
the fourth quarter, is expected to increase by 3.5 percent and 4.5
percent in the first two quarters of 2004,
respectively. Real business spending on
equipment and software should also
continue to post double-digit growth
through the rest of 2004.
The risk of deflation is clearly out of the
picture now and inflation might begin to
be an issue. Although inflation at the
consumer level remains low, commodity
prices at the wholesale level have seen
recent sharp increases, mainly due to rising demand for oil and raw materials as
a result of surging economic
growth in China and other
countries. Gasoline and raw
material price increases are
real concerns for the economy. Some of the oil price
increase is due to the declining value of the U.S. dollar
since oil is priced in dollars.
The Organization of Petroleum Exporting Countries
(OPEC) views dollar declines as profit contraction
and sometimes cuts back on
oil production as a result.
This time, however, increasing demand is the main
cause of the spike in crude oil prices. In
the past three months alone, prices of
steel scrap are up 80 percent, lumber up
26 percent, nonferrous metals up 22 percent, and oil and ocean shipping rates
have increased by 17 percent. While
consumers are quite accustomed to price
increases in services, manufacturers and
retailers are finding it increasingly difficult to pass higher input prices on to
consumers while combating excess
worldwide capacity and operating in a
very competitive environment. Higher
gasoline prices tax both consumers and
businesses. While it might be difficult
In this issue:
Economic Outlook:
2nd Quarter 2004
1
Business Leaders
Confidence Index:
2nd Quarter 2004
5
Selected Indicators
9
A Profile of Older
Alabamians
10
2
Alabama Business
most recent recession
and subsequent recovery. Consequently,
households have
become increasingly
vulnerable to delinquencies and bankruptcies. Historically,
households have
retrenched spending
levels, creating pent-up
demand, during economic downturns.
for businesses to pass additional energy
costs along to consumers, the higher
gasoline prices consumers are hit with at
the pump can reduce consumer expenditures for other commodities and services.
Weak increases in labor costs (as measured by the employment cost index) in
recent months are making it relatively
easier for firms to absorb the higher
energy and raw material costs.
The U.S. services sector also remains
fairly strong. The recent ISM (Institute
for Supply Management) report on business activity showed a 12th consecutive
monthly expansion. The ISM’s nonmanufacturing activity index increased
from 60.8 in February to 65.8 in March;
a reading higher than 50 indicates expansion. New order activity was also up, an
indication of further growth in the near
term. The fastest performing sectors are
expected to be retailing, healthcarerelated services, and computer and
software-related services.
Consumer Spending. Consumer spending has remained strong throughout the
recovery; low interest rates and mortgage
refinancing have been the main catalysts.
Refinancing has begun to decline and
will continue to do so as interest rates
increase. On the bright side, consumer
spending should stay strong as more jobs
are created and income levels begin to
rise. Real disposable income will begin
to increase with improving employment
conditions. Rising income should help
households lower their debt levels. This
is important because households piled
on debt to keep spending strong in the
Employment.
Although job cuts have
significantly decreased
in the last two months,
layoffs still continue in the manufacturing, financial, and information sectors.
This is mainly due to high productivity
and excess capacity in manufacturing
and an increase in merger activity in the
financial industry. Telecommunications
is experiencing intense competition and
high levels of excess and unused capacity.
It has been more than two years since
the recession ended and although
employment in some sectors of the
economy has begun to pick up, most
sectors are still not hiring. The U.S.
economy added over 300,000 new jobs
in March 2004, the largest gain in four
years. The economy has added an average of 171,000 new jobs over the last
three months. Construction contributed over 200,000 jobs in the past
year, including 71,000 in March. After
experiencing a net loss
of jobs since the beginning of the recession in
2001, retailing added
47,000 jobs in March;
the sector has added
almost 132,000 jobs
since December.
Professional and business services, another
strong segment of the
economy, gained
42,000 jobs in March
and has added over
210,000 jobs during the
past twelve months.
Manufacturing payroll
losses have significantly
moderated in recent months; the sector’s
employment was unchanged in March.
This is the first time in 43 months that
manufacturing payroll employment did
not fall.
Manufacturing. Manufacturing activity
accelerated in March, with hiring activity
hitting a 16-year high. The ISM’s manufacturing activity index rose to 62.5 in
March from 61.4 in February. A reading
above 50 indicates expansion in the sector. With the index of new orders showing an increase and low levels of inventory, production will have to increase
in the coming months to meet rising
demand. ISM’s supplier delivery index
jumped to 67.9 in March, the highest
reading recorded since 1979. However,
manufacturers are facing surging costs
and limited supplies of raw materials.
With substantial excess capacity, it will
be difficult for some manufacturers to
add jobs or pass along increasing input
costs to their customers. After rising
by just 0.3 percent in 2003, industrial
production is estimated to increase by
almost 5 percent in the first two quarters
of 2004. However, just a few industries
are expected to show improvement,
mainly manufacturers of big-ticket items
related to residential construction, home
furniture and fixtures, automotive, and
defense spending.
Outlook. GDP is estimated to grow
by slightly over 4 percent in 2004, following a 3.1 percent annual increase in
2003. Consumer expenditures will rise
3.9 percent versus 3.1 percent in 2003.
Alabama Business
Spending on durable goods, which grew
7.4 percent in 2003, is expected to increase 7.1 percent in 2004. Consumer
spending on nondurable goods is forecasted to grow by 4.7 percent, following
a 3.8 percent increase in 2003. Business
spending on equipment and software
will grow by almost 14 percent in 2004,
after a modest 5.5 percent increase in
2003. If the payroll employment data
continues to show strength, the U.S.
economy could add 2.0 million or more
jobs in 2004. However, if the March
payroll data was just an anomaly, and
employment growth retreats again, the
economy may add 1.0 to 1.5 million
new jobs. Manufacturing employment
is expected to shrink by about 200,000
jobs in 2004; a very optimistic scenario
for manufacturing would be that employment remains flat over the year.
Alabama
Employment. Similar to national
employment trends, payroll layoffs in
the state have slowed in recent months.
Another plus for the state is the substantial increase in automotive manufacturing-related jobs, which have provided a
cushion for layoffs in other manufacturing industries. During the twelve-month
period ending in February 2004, the state
gained almost 1,000 jobs. The state’s
manufacturing sector lost about 9,900
jobs in that same period. Durable goods
manufacturers lost 1,800 jobs, a much
smaller decline than in the last couple
of years. This is good news for state tax
revenues since durable goods manufacturing includes many capital-intensive
industries, with higher productivity rates
and wage levels. The automotive indus-
3
try added almost 900 jobs in the last
twelve months, out of a total of 2,200
net new jobs for all transportation equipment manufacturers. While job gains are
being recorded for some durable goods
manufacturing industries, employment
in a number of key manufacturing industries continues to shrink. In the twelve
months prior to February 2004, the
state’s steel industry lost almost 3,400
jobs; textile mills, textile products, and
apparel lost 5,200 jobs; paper manufacturing lost another 300; and electronic
components and products manufacturing, including computer and appliance
manufacturers, lost 1,400 jobs.
Between February 2003 and February
2004, the services sector gained 10,200
jobs. The leisure and hospitality industry added 3,500 jobs, split between
4
Alabama Business
Alabama Nonagricultural Employment
Change in Number of Jobs
February 2003 to
February 2004
Total Nonagricultural
Natural Resources and Mining
Construction
Manufacturing
Durable Goods Manufacturing
Wood Products Manufacturing
Primary Metal Manufacturing
Fabricated Metal Product Manufacturing
Machinery Manufacturing
Computers and Electronic Products Manufacturing
Electrical Equipment, Appliance and Component Mfg.
Transportation Equipment Manufacturing
Motor Vehicle Manufacturing
Furniture and Related Products
Nondurable Goods Manufacturing
Food Manufacturing
Textile Mills
Textile Product Mills
Apparel Manufacturing
Paper Manufacturing
Plastics and Rubber Product Manufacturing
Trade, Transportation and Utilities
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Telecommunications
Financial Activity
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Government
Federal Government
State Government
State Education
Local Government
1,000
0
700
-9,900
-1,800
700
-1,200
-2,200
100
-900
-500
2,200
900
100
-8,100
0
-1,900
-700
-2,600
-300
-1,100
7,100
100
7,000
0
-1,800
-800
500
600
1,700
3,500
-600
-800
-800
100
200
-100
significantly improved compared
to the prior twoyear period and
indicates that the
Alabama economy
is indeed showing
signs of a sustained
recovery. However,
significant additions
to payrolls are not
expected until late
2004 or even 2005.
Tax revenues.
After one of the
worst fiscal years
in decades, the first
two quarters of the
current fiscal year
(FY2004) recorded
a significant improvement. The
state tax structure
faces long-term
Source: Alabama Department of Industrial Relations.
structural problems,
eating and drinking places and accombut revenues for the current fiscal year
modations and food services-related busi- will easily surpass FY2003 as business
nesses. It should be noted, however,
spending and payrolls are improving and
that these industries have relatively low
consumer spending remains strong. For
wage rates. The retail sector, after losing
the first two quarters of the current fiscal
a significant number of jobs since 2001,
year, total tax receipts are up 6.4 percent
added almost 7,000 in the past year, priover the same period of the previous
marily in the major metropolitan areas
fiscal year, from $3.2 billion to slightly
of the state.
over $3.4 billion. Individual income tax
receipts are 5.2 percent higher, increasing
Information and telecommunications
from $1.16 billion to $1.22 billion.
industries continue to shed payrolls,
Corporate income tax revenues, at
with employment dropping 1,800 in the
$137.3 million, are almost 40 percent
twelve months to February. Healthcare
higher than the previous period’s $98.5
and social assistance services added 1,900 million. An almost 8 percent rise has
new jobs. Overall, employment has
taken sales tax collections to about $838
million for the first two quarters of
FY2004, up from $778 million a year
ago.
For the first two quarters of FY2004, the
Alabama Education Trust Fund received
approximately $2.2 billion, an increase
of about $133 million. However, appropriations made to the General Fund
declined by almost 6.9 percent or $44
million to slightly more than $588 million.
Outlook. The state’s economy is expected to grow by 3.8 to 4.0 percent in 2004
with payroll employment rising by 0.6 to
0.7 percent, adding approximately 9,000
to 10,000 jobs. Most of these job gains
will be in services and residential construction. The automotive-related sector
of the economy, including the suppliers
associated with major manufacturers is
forecasted to add a significant number of
jobs in both 2004 and 2005. Both services and retailing sectors of the economy
are expected to grow by slightly more
than 5 percent in 2004, while financial
activity is forecasted to grow 3.2 percent
or better. With the U.S. economy also
showing considerable strength, it is only
a matter of time before interest rates rise,
perhaps by the second half of the year.
Some slowdown is expected in both refinancing activity and new home sales as a
result.
Ahmad Ijaz
®
Second Quarter 2004 • Volume 3 • Number 2
BLCI Barometer
Employment gains in construction, services,
and government in February and the loss of
only a couple hundred manufacturing jobs
helped put Alabama’s job picture back in the
black after three straight years of losses. New
and expanding auto manufacturers and suppliers will be a source of job creation throughout
the remainder of 2004. Growth in the state’s
economy should be helped by accommodative
financial conditions; the continuing effects of
the fiscal stimulus, particularly on consumer
spending; rising business confidence; and productivity gains and profit growth, supporting
business capital investment. Risks to growth in
the state and national economies in the second
quarter include the possible effects of higher
energy prices and of surging commodity prices.
These pressures could force companies to push
productivity gains and outsourcing to cut costs.
Energy prices are expected to be a
continuing concern in 2004. Twothirds of Alabama business leaders
predict that energy prices will increase
substantially during the remainder of
the year. Higher gas prices are effectively a transportation tax on businesses and consumers. Global Insight
estimates that every dime increase in
gasoline prices costs U.S. consumers
around $1 billion per month, so the
25 cent average increase from December to March takes $2.5 billion out of
consumers’ pockets each month. The
recent sharp fall in U.S. crude inventories and gasoline stocks in the face
of strong demand growth and the
approaching summer driving season
does not bode well for prices in the
short run.
Do you think that
energy prices will
increase substantially
during the remainder of 2004?
100
80
66.3
60
Percent
ALABAMA
40
33.7
20
0
Yes
No
Alabama Business Leaders Confidence Index
100
BLCI
80
Index
The confidence of Alabama business leaders in an
improving economy for the second quarter of 2004
matches the record 67 of the first quarter index.
Most panelists expect growth in the national and
state economies to accelerate. However, on the heels
of strong expectations for first quarter economic
performance, more panelists are in the position this
quarter than last of expecting overall economic growth
in both the United States and Alabama to continue
at its current pace. All four industry indicators registered their highest positive readings in the two and
a half years of BLCI survey results. Over 80 percent
of panelists forecast improved sales in their industry
during the second quarter, while more than 69 percent think profits will increase, and almost 60 percent
foresee increased capital spending. Most importantly
for a sustained economic rebound, the share of business leaders expecting their industry to add jobs rose
slightly to 49.2 percent, while the percent anticipating
job cuts fell to a new low of 4.9 percent. Manufacturing seems to be getting back on track, with increases
on all four indicators compared to the previous quarter.
60 56
61 61
67 67
40
20
0 Q2 Q3 Q4 Q1 Q2
2003
2004
Center for Business and Economic Research, The University of Alabama
The National Economy
National Economic Outlook
80
Q2 2004 compared to Q1 2004
70.2
60
Percent
U.S. economic growth accelerated in the first quarter of 2004,
in line with the predictions of an overwhelming 89.1 percent
of BLCI panelists. Continued consumer spending, low interest rates, rising productivity, and record profits were finally
supported by the beginnings of job creation. Alabama business leaders feel confident that the pace of growth will pick
up further in the second quarter, with 78.3 percent predicting
increased economic activity at the national level. Given first
quarter gains, however, some respondents think growth will
continue at the first quarter pace (15.2 percent) or will slow
(6.5 percent). Still, the second quarter outlook represents the
second highest consensus for growth since the survey’s inception and contrasts with a year ago when the survey, completed
as the United States prepared to go to war in Iraq, found just
over half of panelists forecasting economic gains.
40
20
0
15.2
0.7
8.1
5.8
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
The Alabama Economy
Alabama Economic Outlook
80
Q2 2004 compared to Q1 2004
62.8
60
Percent
Business leaders are optimistic about prospects for growth in
the Alabama economy. About 65 percent expect economic
activity to increase in the second quarter of 2004, a sharp
contrast to a year ago when just 43 percent forecast gains.
A number of new and expanding automotive manufacturers
and suppliers should be hiring during the quarter, adding to
modest job gains from other sectors including construction,
services, and government that could reverse Alabama’s threeyear job decline. And, although lawmakers are grappling
with anticipated budget shortfalls for FY2005, the current
fiscal year crunch has been eased by cost-cutting measures
and improved revenues. The 65 percent of panelists forecasting increased growth in the state’s economy in the second
quarter is off from 71 percent last quarter as some moved
into the position of expecting economic activity to continue
at the first quarter pace. However, just 5.1 percent think
the state’s economy could slow—the lowest negative reading
since the BLCI survey began in first quarter 2002.
40
30.0
20
0
0.9
80
Interest Rates
Q2 2004 compared to Q1 2004
62.6
60
Percent
2.1
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
Interest Rates
Most BLCI panelists (62.6 percent) expect interest rates to
hold steady during the second quarter of 2004. The Federal
Open Market Committee left the federal funds target rate at
1.0 percent at its March 16 meeting, citing the importance
of an accommodative stance in helping drive economic
activity in the face of continued weak job creation. With the
economy picking up, however, about 35 percent of Alabama
business leaders think interest rates could rise by the end of
June. If the more robust March job gains can continue for
several months, some forecasters expect a modest hike of
0.25 percent to come as early as June, particularly since
there are now clear signs that inflation has bottomed out.
4.2
40
34.0
20
0
0.0
2.5
0.9
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
C e n t e r f o r B u s i n e s s a n d E c o n o m i c R e s e a rc h
Industry Sales
Industry Sales
80
Q2 2004 compared to Q1 2004
70.2
60
Percent
Sales should be the strongest contributor to accelerated economic activity in the second quarter of 2004. Eighty percent
of panelists expect sales in their industry to be above first
quarter levels, up slightly from last quarter for the most optimistic prediction in survey history. And the 5.6 percent of
business leaders forecasting a decline in sales is the lowest
negative. Consumer spending should be supported in the
second quarter by an anticipated $25 billion one-time boost
from extra tax refunds that more than offsets the negative
effect of higher gasoline prices in the short term. Almost 91
percent of respondents in wholesale trade anticipate higher
second quarter sales, while over 83 percent of retail trade and
finance, insurance, and real estate (FIRE) panelists expect sales
gains. Transportation, information, and public utilities (TIPU)
could see the largest increase in sales, with 86.7 percent predicting higher second quarter sales compared to 66.7 percent
last quarter. Manufacturers are slightly more optimistic about
sales growth this quarter, with 77.4 percent expecting gains.
40
14.3
20
0
0.5
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
Industry Profits
80
(continued on next page)
Q2 2004 compared to Q1 2004
60
40
22.2
20
0.9
0
Industry Hiring
7.6
7.4
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
80
Industry Hiring Plans
Q2 2004 compared to Q1 2004
60
Percent
While the first quarter of 2004 brought a glimmer of job
creation in Alabama, the second quarter offers promise that
the state will begin to recover from three years of job losses.
Alabama business leaders are the most confident since the
survey’s inception in first quarter 2002 that the state will add
jobs—49.2 percent forecast job gains in their industry, while 46
percent expect employment to be unchanged. Most importantly, only 4.9 percent of panelists think their industry will shed
jobs this quarter—a new low. Over half of respondents in construction, services, and FIRE expect job gains in their industry
during the second quarter. The hiring outlook is most
Industry Profits
61.9
Percent
Alabama business leaders generally anticipate increased profitability in the second quarter, with 69.3 percent forecasting
gains in their industry—the highest positive expectation since
the BLCI survey began in first quarter 2002. Weak wage gains
continue to allow sales growth to be passed on to profits. Profit
expectations are most robust in TIPU, where over 83 percent
of panelists feel profits will rise in the second quarter—a jump
of 25 percentage points from last quarter’s 58 percent. Profit
growth is also expected to be above average in wholesale and
retail trade, FIRE, and leisure, hospitality, and other services.
In manufacturing, the negative effects of the rapid rise in
commodity prices should be offset by increasing demand and
a continued upside to productivity gains. Over 65 percent of
Alabama manufacturers expect profits to strengthen during the
second quarter of 2004, up from about 57 percent last quarter.
9.9
5.1
46.0
45.0
40
20
0
0.5
4.4
4.2
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
C e n t e r f o r B u s i n e s s a n d E c o n o m i c R e s e a rc h
(continued from previous page)
improved for construction, with spring weather and
continued strong housing sales in view. And while half
of manufacturers expect employment to be flat, the
45.4 percent expecting to see jobs added is up from
41.1 percent in the first quarter.
Industry Capital Expenditures
80
Industry Capital Expenditures
Q2 2004 compared to Q1 2004
60
Percent
Capital spending should be a significant component
of economic growth in the second quarter of 2004.
Strong profits have given companies money to invest
and the bonus depreciation tax deduction set to expire
at the end of 2004 gives them a reason to purchase
equipment and software this year. Close to 60 percent
of Alabama business leaders anticipate an increase in
capital expenditures in their industry in the second
quarter, up about one percentage point from last
quarter. And the share expecting capital spending
to decrease dropped to a survey low of 4.8 percent.
Retailers are most likely to make second quarter capital investments, according to the forecast of 70 percent
of industry panelists. Capital spending should also
be particularly strong in health care services and FIRE,
with around 63 percent of respondents predicting
increases. Manufacturers are more likely to make
capital investments this quarter than last—the 60.6
percent of industry panelists forecasting an increase
is up from 51.8 percent in the first quarter.
50.8
35.3
40
20
0
0.2
4.6
9.0
Strong Moderate
No
Moderate Strong
Decrease Decrease Change Increase Increase
BLCI Panelists
More than 400 Alabama panelists completed the second quarter 2004 BLCI survey online during March.
Respondents registered their views on the probable
course of the national and Alabama economies and of
sales, profits, hiring, and capital expenditures in their
industry. Alabama business leaders responding to the
survey represent small, midsize, and large companies
across Alabama’s 11 metropolitan areas and over 40
nonmetro communities. On the second quarter surThe BLCI is a
Compass on Business
initiative created in
collaboration with:
vey, 35.3 percent of participating firms reported annual sales under $5 million, while 36.2 percent had sales
in the $5 to $50 million range, and 23.8 percent tallied sales of more than $50 million. In terms of employment size, one third of second quarter panelists
were from firms with fewer than 20 employees, while
29.8 percent employed 20 to 99, and 37 percent had
at least 100 employees.
THE UNIVERSITY OF
ALABAMA
CENTER FOR BUSINESS &
ECONOMIC RESEARCH
For more details on the Alabama Business Leaders Confidence Index, visit www.blcindex.com/alabama/.
For more details on the Center for Business and Economic Research, visit cber.cba.ua.edu.
Alabama Business
Selected Economic Indicators
United States
Gross Domestic Product (billions)
Percent Change
10-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
2002/Q4
2003/Q1
2003/Q2
2003/Q3
2003/Q4
2004/Q1
10,160.8
2.8
4.0
1.4
1.81
2.2
1.89
6.9
130.2
-0.5
5.9
10,210.4
2.1
3.9
1.2
1.83
2.9
1.87
-1.5
130.0
-0.3
5.8
10,288.3
2.4
3.6
1.0
1.83
2.2
1.87
0.7
129.9
-0.4
6.1
10,493.1
3.6
4.2
0.9
1.84
2.2
2.02
8.0
129.8
-0.4
6.1
10,599.2
4.3
4.3
0.9
1.85
1.9
2.16
13.9
130.0
-0.2
5.9
10,715.9
5.0
4.1
0.9
1.86
1.7
2.04
8.8
130.2
0.1
5.6
2002/Q4
2003/Q1
2003/Q2
2003/Q3
2003/Q4
2004/Q1
1,870.1
0.0
299.7
-3.1
1,876.9
-0.8
296.2
-3.9
1,868.3
-1.0
294.0
-4.2
1,883.8
-0.7
294.9
-3.4
1,863.6
-0.3
288.5
-3.7
167.8
-2.9
166.2
-3.4
164.6
-4.1
165.8
-3.1
164.9
-1.7
131.9
-3.2
130.0
-4.5
129.4
-4.2
129.0
-3.9
123.6
-6.3
77.1
-2.7
77.5
-2.5
77.5
-1.1
77.2
-0.6
76.6
-0.6
226.0
-0.1
5.5
32.6
41.5
1,574.4
6.3
691.9
3.2
393.2
5.9
226.6
-0.7
5.6
27.1
41.4
1,664.7
-3.0
791.4
-5.1
404.2
2.6
225.3
-0.5
5.7
25.7
40.8
1,495.4
-3.0
641.0
-5.5
394.2
-0.2
232.4
0.2
5.7
24.6
41.0
1,516.3
9.3
643.1
12.1
424.9
10.4
231.1
2.3
6.0
28.4
40.9
1,755.9
11.5
720.4
4.1
413.4
5.1
Total Nonagricultural
Employment (thousands)
1,897.4
Percent Change
-0.5
Manufacturing Employment (thousands) 305.4
Percent Change
-3.7
Durable Goods Manufacturing
Employment (thousands)
171.1
Percent Change
-2.3
Nondurable Goods Manufacturing
Employment (thousands)
134.3
Percent Change
-5.5
Wholesale Trade
Employment (thousands)
77.6
Percent Change
-4.9
Retail Trade Employment
(thousands)
231.8
Percent Change
-0.9
Alabama Unemployment Rate
5.9
Initial Benefit Claims (thousands)
27.8
Manufacturing Weekly Hours
40.5
Total Tax Revenues (millions)
1,387.0
Percent Change
4.8
Total Income Tax Revenues (millions)
573.8
Percent Change
9.8
Total Sales Tax Revenues (millions)
385.1
Percent Change
-1.2
Note: All percent changes indicate change over the 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.
9
10
Alabama Business
A Profile of Older
Alabamians
Population Size and Composition.
Alabama was home to 592,181 people 65
and over on July 1, 2003, according to
Census Bureau estimates. The state’s
older population increased by 12,383
since 2000, a 2.1 percent gain that
exceeded the 1.2 percent total population increase. There were 522,989
Alabamians 65 and over in 1990. Older
residents as a share of total population
increased only slightly from 12.9 percent
in 1990 to 13.0 percent in 2000. It
reached 13.2 percent in 2003. Residents
85 and over numbered 67,301 in 2000
and climbed to an estimated 71,484 in
2003. Between 1990 and 2000, persons
85 and over rose 18,794, a 38.7 percent
increase.
Women outnumber men, with the discrepancy increasing sharply with age.
The 65 and over population in Alabama
was 39.9 percent male and 60.1 percent
female in 2000. While there were 79
men for every 100 women in the 65 to
74 age group, for age 85 and over the
ratio was just 36. Alabama’s older population is less diverse than its younger
residents. Eighty percent of individuals
65 and over reported their race as white
alone on the 2000 census, while 18.9
percent selected black alone. Among
Alabama’s population under age 65,
69.8 percent list their race as white alone
and 27.1 percent fall into the black alone
category.
Marital Status
and Living
Arrangements.
Older men are much
more likely than
older women to be
married and living
with their spouse.
In the 65 to 74 age
group, 76.3 percent
of men and 49.1
percent of women
reported this marital
status in 2000. But
for the oldest age
group, these numbers dropped
sharply—45.4 percent of men 85 and
over and just 6.7
percent of women lived with a spouse in
2000. By the time they reach age 75,
most older women (60.7 percent) are
widowed. By contrast, just 19.1 percent
of men in the 75 to 84 age group were
widowers.
Among Alabamians 65 and over, 54.4
percent resided in family households,
while 45.6 percent lived in a nonfamily
household setting—primarily living alone.
There were 28,924 elderly residents in
group quarters in 2000, including 24,623
in institutions including nursing homes.
This compares to 22,704 institutionalized
elderly in 1990. Most older householders own their homes—82.3 percent in
2000 compared to 17.7 percent renting.
Home ownership among older Alabamians rose during the decade; in 1990,
79.4 percent of older householders
owned their homes. Older residents are
likely to remain in the
state, at least until very
late in life, when living
arrangements may change
as a result of failing
health. Between 1995 and
2000, 19,765 persons 65
and over moved into
Alabama, while 16,734
moved out for a net gain
of 3,031.
Health Status. The ability
to function independently
is a key component of a
good quality of life for the
older population. In 2000
about 275,000 state residents 65 and
over, or 49.5 percent of the noninstitutionalized older population, were affected by at least one long-lasting condition
or disability. Over 197,000 older residents (35.5 percent) have a physical condition that limits basic activities such as
walking, climbing stairs, lifting, or carrying. And one in four Alabamians 65 or
older has difficulty going outside the
home to shop or visit a doctor.
Seventeen percent of older residents suffer from blindness, deafness, or a severe
vision or hearing impairment. Over
81,000 have difficulty learning, reading,
or concentrating, while close to 72,000
have a condition that makes it hard to
dress, bathe, or get around inside the
home.
Alabamians 65 and Over
by Type of Disability, 2000
Number Percent
Number of Disabilities
None
One
Two or more
280,361
118,603
156,441
50.5
21.4
28.2
Type of Disability
Sensory
Physical
Mental
Self-care
Go-outside-home
94,555
197,242
81,229
71,904
139,401
17.0
35.5
14.6
12.9
25.1
Note: Disabilities are for the noninstitutionalized population. Individuals may mark
multiple disabilities.
Source: U.S. Census Bureau.
Alabama Business
Transportation. Access to transportation
is another important factor in the quality
of life and independence of the older
population. According to Census 2000,
most older Alabamians have a vehicle
available—just 9.7 percent of residents
aged 65 to 74 and 22.1 percent of those
75 and over had no vehicle available.
But having a vehicle parked at a residence does not mean that the individual
is willing or able to drive. A 2004 study
by the American Public Transportation
Association and the AARP reported that
104,207 (18.0 percent) of Alabamians 65
and older were non-drivers in 2000.
They estimate that on any given day, 69
percent of these non-drivers stay home
due to lack of transportation on average
in the four-state region consisting of
Alabama, Kentucky, Mississippi, and
Tennessee.
Income and Poverty. Median household
income in 1999 peaked between the ages
of 45 and 54 at $46,705. Income then
tapers off fairly rapidly—at $25,676,
median household income for Alabamians aged 65 to 74 amounted to 55.0
percent of peak income, while income
of $17,729 in the 75 and over bracket
was just 36.7 percent. The 2000 census
estimated that income of 86,276 Alabama residents 65 and over fell below
the poverty level in 1999. This 15.5 percent of the older population in poverty
is down from 24.0 percent 10 years earlier. Women in this age group were much
more likely than men to live in poverty—
10.7 percent of 65 and over men and
18.8 percent of women had income in
1999 below the poverty level. Poverty
rates increased with age as 12.9 percent
of the state’s population aged 65 to 74
years lived in poverty compared to 19.0
percent of those 75 and over.
Labor Force Participation and
Employment. The youngest members of
Alabama’s 65 and over population are
most likely to work or be looking for
work. One in five residents aged 65 to
69 were in the civilian labor force in
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
11
2000, with 34,264 working and just 3.4
percent unemployed. Men were much
more likely to be in the labor force than
women in this group—26.3 percent of
males and 16.5 percent of females.
Employment tapers off quickly with age,
with 12.0 percent of Alabama residents
70 to 74 and 4.8 percent of those 75 and
over working in 2000.
A Growing Older Population. While
growth in the 65 and over population
will be moderate through 2010, it will
begin to accelerate in 2011 as the first of
the baby boom generation turn 65. And
as the oldest baby boomers reach 85 in
2031, that population group will increase
rapidly. This aging swell will impact all
aspects of the Alabama economy, from
health care to housing to transportation
to consumer spending, as a large segment of the population shifts from
work to retirement. Projections from
the Center for Business and Economic
Research show the state’s 65 and over
population growing by 339,426 between
2010 and 2025, for a gain of 51.4 percent. This contrasts with the addition
of just 80,545 residents to this age group
between 2000 and 2010, an increase of
13.9 percent.
in 2000. While 13.0 percent of the
state’s residents were 65 and over, shares
of county populations in this category
ranged from 8.1 percent in Lee and 8.5
percent in Shelby to 17.9 percent in
Covington. County populations will
not age at the same rate between 2000
and 2025 due in large part to migration
patterns. Expanding economic opportunity in some counties will draw more
working-aged in-migrants, while lack of
opportunity in others will result in the
loss of college- and younger working-age
Alabama’s older population was not
individuals. If this latter pattern persists,
evenly distributed across its 67 counties
counties with perennially high unemployAlabama’s Older Population, 2000 to 2025
ment such as Butler,
Choctaw, and Greene
65 and over
85 and over
could find close to a
Number
Change
Number Change
quarter of their residents in the 65 and
2000
579,798
67,301
over age group in 2025.
2005
609,135
5.1%
75,632
12.4%
Older populations
2010
660,343
8.4%
87,438
15.6%
could swell in Alabama
2015
757,211
14.7%
98,488
12.6%
counties such as Bald2020
871,646
15.1%
108,478
10.1%
win that are retirement
2025
999,769
14.7%
122,605
13.0%
destinations as well.
Note: The 65 and over population includes the 85 and
over population.
Source: U.S. Census Bureau and Center for Business and
Economic Research, The University of Alabama.
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
Carolyn Trent
Business and Economic Research, Box
870221, Tuscaloosa, Alabama 35487-0221.
Copies of this publication as well as other
socioeconomic data resources are available
on the Center website: http://cber.cba.ua.edu
12
Alabama Business
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