South Carolina economy shows strength amid growth challenges

 

Experts say South Carolina’s economy is humming. Between the continued long-term success of the manufacturing industry and the surging life sciences industry, each metro hub in the state is experiencing similar growth.

But the Palmetto State is not without its economic challenges.

As cities like Charleston encounter 42 people moving into the region per day, the affordability of a typically “low cost of living” state is shifting.

The cost of living combined with the murkiness of tariffs and an uncertain national economic picture has South Carolina charting unfamiliar waters.

While the Palmetto State is on steadier economic footing than most other states — it led the country in real GDP in early 2025 — economists offer a peek into the future to predict what lies ahead in 2026.

South Carolina from a regional perspective

In a state that offers landscapes from beaches to mountains, each regional metro has its own industry attractions.

In the Upstate, John Lummus, president and CEO of Upstate SC Alliance, said since stepping into the position over a decade ago, he has seen nearly 15% growth in the regional population. Lummus said a lot of growth has come from the development of the downtown areas of Greenville, Spartanburg and Anderson.

According to a One Spartanburg report by Clemson University researcher Bob Brookover, the construction projects that have been completed in downtown Spartanburg since 2017 have had a $1.77 billion economic impact throughout the county.

In addition to population and infrastructure development, manufacturing has continued to move into the Upstate. Global advanced manufacturers moving into the region, such as Isuzu, which broke ground on a $280 million plant in Greenville, bring big financial and employment gain.

It also translates into high-paying jobs.

“As we have gotten more into advanced manufacturing and transitioned out of the textile economy, wages are over 10 times higher,” Lummus said.

Between livability costs and access to workforce, the middle of the state is seeing similar growth.

Jason Giulietti, president and CEO of Central SC Alliance, said the Midlands is seeing businesses move into the region as a more affordable option to other parts of the state.

“You still get the access points of the major metros around us, but you then see a lower cost to hire staff, build a facility and rent that facility than you would see areas to the north and south that are a bit more expensive,” Giulietti said.

Giulietti said the alliance is more aggressively tuning into all assets in the region, leveraging the University of South Carolina and technical college graduate workforce and boosting airport potential.

Similarly to the rest of the state and country, Giulietti said keeping up with labor demand has proven difficult. Even so, he says the region remains strong in machinery, chemicals and plastics, and the energy sector, predicting emerging opportunities in the food and beverage, automotive and life science sectors.

As for the Lowcountry, hospitality continues to be a large portion of the economic bustle. Charleston visitor counts and occupancy rates remain stable at around 70%, Mark Witte, an economics professor at College of Charleston, said.

In addition to tourism’s steady rate, the cost of each visitor continues to grow. Since 2021, the revenue per available room in the region has risen by 21.4% and is expected to rise into 2026, according to a study done by Witte for the Charleston Chamber of Commerce.

Between being a popular travel destination and seeing an increase of 42 people per day, infrastructure becomes a concern for the livability of the region.

“We need to be thinking forward with our infrastructure,” Witte said. “Instead of thinking, ‘will this solve the problem today?’ we need to be thinking, ‘will this solve the problem 10 years from now?’ If that commute gets longer and that livability becomes less, all the sudden we are not as attractive as a Greenville or Columbia.”

Where does the state experience challenges?

“Pervasive uncertainty” is the theme Joey Von Nessen, research economist at the University of South Carolina, has given 2025. Between businesses hesitation when it comes to trade policy and tariffs, and consumers’ uncertainty with rising prices and affordability, the state and country have a few obstacles to overcome.

“People are concerned about whether they will have their job next year, people are concerned about their income levels and people are concerned about how quickly prices are rising,” Von Nessen said.

Similar to the rest of the country, South Carolina has one industry that is struggling the most.

Witte said retail sales aren’t seeing growth right now because households are spending a greater proportion of their budget on things like insurance, rent, medical care and even student loans.

Witte said he uses “anecdotal data” when considering the lack of retail spending.

“If you are ever at Target, this works particularly well. Go look at the towels, the pillows and the sheets, all the things that people could replace but don’t have to replace. What you want to see is ransacked shelves,” Witte said.

Additionally, tariffs are making it hard for consumers to purchase goods because of the pressure they put on prices. Businesses are showing awareness of that hesitation and considering the spike in inflation over the past year, Von Nessen said consumers are expected to recover the lost purchasing power in January 2028.

South Carolina in comparison to the U.S. 

Though South Carolina has its fair share of struggle, in a year of national slowdown, “steady” looks a bit more like a competitive advantage.

Bethany Greene, regional economist for the Federal Reserve Bank of Richmond, said that payroll employment growth in South Carolina has grown three times as fast as the United States as a whole. Greenville and Charleston are the strongest metros in the state for employment strength and driving the state’s performance.

“Access to a port is a major selling point for new employers, as companies can save money on transportation and logistics costs due to proximity, so from an economic development perspective, the port is a major reason why South Carolina has attracted so many businesses that import or export,” Greene said.

During the first quarter of 2025, South Carolina recorded significant growth for both GDP and personal income, according to a report from the South Carolina Department of Employment and Workforce. South Carolina’s real GDP, which accounts for inflation, increased at an annualized rate of 1.7%, outpacing all other states and the District of Columbia, the report stated.

Repeatedly, economists say the true powerhouse behind the economic boost in South Carolina can be attributed to manufacturing. Following suit, life sciences and health care are the top industries to watch.

Yet, as paychecks grow by 3%, inflation also remains at a 3% growth, Von Nessen said

Though South Carolina is a business hub for transportation of goods, markets such as manufacturing and logistics are seeing a larger decrease in employment growth, a lot of which can be contributed to global trade struggles. Unemployment has remained steady at about 4.3%.

“South Carolina’s economy has remained far more resilient than what we have seen at the national level,” Von Nessen said. “In fact, South Carolina has actually been No. 1 in the country in 2025 in terms of overall employment growth.”

South Carolina has seen the largest growth in employment in construction and professional and business services. Considering the increase in population in the state as a whole, industries like construction and real estate are strengthened.

“Growth can place strain on resources and infrastructure. An issue that is particularly of concern is the cost of housing, particularly in markets that continue to see significant growth,” Greene said in an email. “Although South Carolina is typically seen as a low-cost of living state, housing affordability has deteriorated notably over the past few years.”

Despite challenges mostly caused by national pressures, experts say South Carolina is well positioned to thrive moving into 2026 and beyond.

“Growth rates are fairly stable and don’t point to any major change in momentum for the consumer as we move into 2026,” Von Nessen said.

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