Small businesses have not seen the negative effects of South Carolina’s economy the same way big businesses have, according to experts in the Darla Moore School of Businesses.
Joseph Von Nessen, a research economist at the Darla Moore School of Business, said rising interest rates have affected employment, markets and more. The industries that have been mainly affected are the manufacturing and housing industries, which sell big-ticket items, he said.
New homes are the most expensive purchase the majority of consumers will make, he said.
"When you raise interest rates ... that increases the cost of borrowing money for consumers and for businesses on most big-ticket items," Von Nessen said.
William Hauk, an associate professor of economics at the Darla Moore School of Business, said that companies such as BMW and Volvo make up a "large part of the state's economy."
Due to higher interest rates, people buy fewer products from these companies, hurting the economy since South Carolina is "heavily dependent" on big-ticket manufacturing items, Hauk said.
With lower interest rates, it will be easier for businesses to borrow money, hire new workers and create more jobs, according to Forbes.
According to the United States Bureau of Labor Statistics, the unemployment rate in South Carolina went from 3.0% in January to 4.5% in September. Additionally, there were nearly 90,000 people unemployed statewide, the highest since August 2021, according to a university release from USC Daybook on July 22.
People are still entering the labor market, Von Nessen said, but it is taking longer for them to find a job than it did this time last year. Labor force participation has increased from 57.2% in January to 57.6% in September, according to the Bureau of Labor Statistics, but SC has more jobs open than unemployed citizens to fill them.
Small businesses accounted for 14,969 openings and 11,133 closings between March 2020 and March 2021. There was a net increase of 3,785 for South Carolina establishments in general, according to the 2022 Small Business Profile through the U.S. Department of Small Business Association's Office of Advocacy.
The profile also stated that small business employment in South Carolina increased by 28.2% between 1995 and 2019, which "exceeded the national small business employment growth rate."
"Small businesses are looking to satisfy market demand, and so they have to be aware of where the markets are headed and make sure they are facilitating or meeting that demand," Von Nessen said.
The service market, which deals with services such as maintenance, repairs and training, had one of its best years in South Carolina this year, said Von Nessen. He said people have increased their support for these businesses post-COVID-19 pandemic.
The Office of Economic Engagement’s goal is to help create and grow small businesses through programs funded by the federal government, Dr. Stephen Cutler, vice president for Economic Development and dean for USC’s College Performance, said.
These programs include Apex, a federal grant that trains and supports small businesses in writing proposals, knowing how to identify contracts and more, according to the Office of Small Business Programs through the U.S. Department of Defense.
It serves companies in all 46 counties in the state of South Carolina, Cutler said. The program has helped with acquiring $200 million in federal contracts between the Department of Defense and small businesses in the state, he said.
Another program is the FAST program, which is available for anyone who wants to grow a small business, Cutler said.
If a federal organization has $100 million in the yearly budget, then it has to give citizens a Small Business Technology Transfer program. Furthermore, if it has over a billion dollars, then it has to give them a Small Business Innovation Research program, Cutler said.
These programs and more will help these citizens ”achieve financial support from the federal government in the growth and development of small businesses,” Cutler said.
It is the office’s desire to make a positive impact on the state’s workforce development and train students who are ready to enter the workforce when they graduate, he said.