♪ > Welcome to This Week in South Carolina , I'm Gavin Jackson.

This week we're looking at the economy both in the state and globally.

And to do that we have insight from SC Ports CEO Micah Mallace as well as Doctor Joey Von Nessen who's a research economist, at the USC Darla Moore School of Business.

Joey, you're here with us, welcome back.

Dr.

Nessen> Thank you, Gavin, good to be here.

Gavin> So a lot has changed since we last talked, <Yes, yes.> last December in 2025.

That was back when you and Doctor Doug Woodward give your annual, you know, economic outlook forecast for the year ahead.

It's always insightful, we recap the year, and we look ahead.

We're now post the first quarter in 2026.

We're in the middle of April.

A lot has changed to things that you guys may have seen, things we didn't foresee back in December.

Give us your impression of how things are right now economically, what you're seeing.

> Well, overall, the one thing that hasn't changed is the uncertainty that we are still experiencing.

And certainly this is coming from a new source now, in terms of the back and forth in the Middle East, the uncertainty there associated with energy prices, especially in terms of how it affects the economy.

Right now, at the national level and in South Carolina, we are still seeing positive economic growth, but we are seeing a resurgence of inflation, which is the real wild card that we have been looking at as a factor that could slow down the economy in 2026.

We have seen inflation now tick above 3%, as we've seen rising energy prices.

That's filtered down into gas prices going up for the average South Carolinian, of course.

That's gone up by about a dollar a gallon over the last six weeks or so.

And that raises additional concerns that consumer spending, more broadly, may cut back as we look ahead to the second half of the year.

So overall, we are still expecting positive growth in 2026, but slower than we were expecting at the start of the year.

This is basically just another economic headwind.

Gavin> Yeah, which is kind of concerning because folks were hoping that we'd get a little bit more clarity this year, especially with the tariff situation being somewhat resolved.

We'll talk about that in a moment with free funds.

But, this is a big curveball that is really affecting a lot of things like you're saying when it comes to, CPI 3.3% right now for the year with energy costs really driving that, and that ticked up .9% too in March, when everything was kind of trending down.

So it's kind of unfortunate to see that.

I mean, do you see that, do we even really know the full ramifications of what that looks like right now, just six or seven weeks into this war?

Dr.

Nessen> We don't yet because energy prices going up can be, integrated into industries across the board.

So it's not just about the price at the pump, although that certainly important.

But when you think about everything that you buy, there are transportation costs associated with it.

So when you're buying things that are shipped to your house on Amazon or you're going to the grocery store, you know, those are groceries that have to be shipped.

We have a lot of other items that come through the Gulf as well.

Things like, aluminum and fertilizer and other chemicals.

So it's not just about, oil prices themselves.

And so that filters to the broader economy.

And we may see additional impacts on inflation later this year.

And the reason that's so important to keep our eye on in 2026 is because we have to remember that consumers are still recovering that lost purchasing power.

You know, we talk a lot about that, but this has been a multi-year process.

Consumers lost purchasing power between 2020 and 2022.

They're slowly clawing it back.

We've clawed back about half of it, half of what we lost.

So we still have a ways to go.

And this again, is another headwind in terms of getting back to where we were, and could potentially limit consumer spending.

Gavin> Yeah, Joey to that effect, when we talk about the consumer, I mean, affordability has always been the biggest issue, even back to the election 2024.

It's a big issue of last year, it still is right now.

And then of course, costs are going up.

We're talking about 3.3% inflation driven primarily by energy costs because core inflation is about 2.6%.

But that's still concerning.

<Still high, yes.> But when we're talking about consumer spending, I mean, that's plunged to its lowest level in like five years plus, affordability again is a big issue.

So again, going back to the consumer, how much longer can the American consumer hang on to this?

When we look at prices, we look at shrinkflation.

All these different aspects of the economy right now.

Dr.

Nessen> Well, that's the million dollar question.

And right now consumers have been very resilient.

We've continued to see fairly steady rates of consumer spending into early 2026.

But how long can that last and how high can inflation go?

I think certainly from an energy standpoint, one metric to look at is perhaps an inflection point.

Again I say that with, take it with a grain of salt.

If we look at oil prices, if they get above $150 a barrel consistently, then that would be more of a red flag in terms of how high prices would have to rise in order to really filter through and cause a broader pullback, because if you look back to 2011 and 2012, in the aftermath of the Arab Springs, we saw oil prices get to $150 a barrel.

It did not cause a recession, did have an impact on consumer spending.

So there is a little bit of wiggle room there.

Again, if we're just talking about avoiding recession, for oil prices to rise for a brief period of time, but again, not a whole lot of wiggle room.

And certainly that will create slower growth for the second half of the year.

Gavin> But oil was still flowing, at least at that point when it was 150.

Right now, the Strait of Hormuz is still in jeopardy.

There's talk of a naval blockade with American forces over Iran's ports and such.

But again, the Strait is still very much in jeopardy.

And while we don't rely too much on that foreign oil right there, it's all relative.

It's all global, especially for our allies and also our adversaries.

So, I mean, is that where we're really going to start seeing the ripple effects showing up more, maybe when we start seeing, you know, India or South Korea or these other places that really rely on that energy, starting to say, "Hey, like, we can't stomach these prices anymore."

It's gonna get passed on even further to Americans.

> Yes, and if you look at Europe as well, where they are much more, much more vulnerable to these price increases, in the U.S., we can absorb that more in terms of, in terms of the price increases, just as a, as a wealthier nation as a whole.

Again, not to say that's not going to impact consumers and consumer spending.

But it does make a difference in terms of how different countries are going to, going to react.

And again, it's not just about it's not just about gas prices.

It's about these, these ripple effects into these other goods too.

Gavin> Joey, we have about five minutes.

When you were talking about how you still expect to see some growth in the economy, is it just gonna be less than what y'all thought it was gonna be?

Where could those bright spots, be?

And we'll talk about labor in a moment, but where do you see that growth happening, especially in South Carolina?

Dr.

Nessen> Well, the main area of growth that we're seeing right now is in healthcare.

That's the number one driver in South Carolina.

And across the country as well, which is primarily driven by our population growth, which is number one in the country.

And if we look at census data over the last year, we've consistently been in the top five.

So that's fueling, broad-based demand, but especially in healthcare.

But more generally, we've also been resilient in the face of the slowdown that we've experienced at the national level over the last year.

So even if we look at, look more broadly, if we look at construction, that tends to, that's continuing to do well.

Manufacturing has seen slower growth but still positive overall.

So the economy as a whole continues to be stable as we look forward.

But again, growth is expected to slow in the second half of the year if inflation stays at its current level.

Gavin> And I know we're talking about South Carolina, but I know we're also interconnected as well.

And we're fortunate that we're growing so much in our state.

How concerned now are you, versus you were back in December about a possibility of a recession?

Because we really kind of put that to rest back then.

Now it's cropping up again.

So I mean, what are you looking at, what fundamentals are maybe flashing red to you?

Dr.

Nessen> So the main indicator that we're watching is inflation.

And again, getting back to how that influences consumer spending.

If inflation continues to tick up then that's going to cause consumers to eventually pull back, which is going to impact demand.

And we will see those ripple effects, particularly in the labor market, is where we would expect to see it first.

So I think the probability of recession almost certainly higher now than it was at the beginning of the year, still fairly low, because again, if we look at oil prices, they're about $95 a barrel based on where we are today, up from about 65 or so at the beginning of the year.

If we see that increase significantly, get up to about $150 a barrel and it stays there for a significant period of time, that's really the red flag from an energy standpoint, that we'd be looking for at this point.

Gavin> And I guess seeing back to back months of elevated inflation too.

We have a few moments left Joey, and I try and ask you about the current unemployment rate and what we're looking like in labor.

Department of Employment and Workforce released its January numbers last week, showing unemployment at 4.9%, with the labor force adding 62,700 people.

So it seems like we're keeping up with demand for these jobs and that the markets are pretty stable right now.

What's your read on that?

We still have more data to come out for the first quarter, but what does that say to you?

Dr.

Nessen> So the population growth is what's driving the unemployment rate to move up.

And the main reason is that if we look at employment growth overall, it has been fairly stable, weaker than we saw a year ago.

But at the national level, that's okay because immigration has slowed.

So we haven't seen as much population growth at the national level.

And when you see slower population growth, you don't need as many new jobs per month.

So we have slower population growth at the national level.

The opposite is happening in South Carolina.

We see very strong population gains.

And because we're not, our employment growth is positive, but it's not high enough to rapidly absorb those new entrants into the labor market.

We're seeing that slow uptick in the unemployment rate.

So that will probably continue, we'll see small marginal increases in the unemployment rate this year because we see so much population growth and the job growth just isn't keeping up right now.

Gavin> So really don't look too much or don't focus too heavily on that number per se as much as how many folks we're seeing actually added to it.

Dr.

Nessen> Exactly, and it's never good to see the unemployment rate go up.

[laughter] I'm not implying that.

But if there were a good reason for it to go up, this would be it, because it basically just means people are coming into the market, into the labor force, and they're just not being absorbed quickly.

Gavin> And with a minute Joey, just again kind of reiterate where we are right now in April, looking out for the rest of the year.

Dr.

Nessen> So we expect slower growth for the second half of the year, mainly because we've seen an uptick in inflation and that is having an impact on consumer spending.

And we have to remember that consumers are still recovering that lost purchasing power.

But having said that, we are not anticipating a recession.

We are anticipating slower growth.

But particularly in South Carolina, we've been far more resilient.

Most industries are still seeing positive growth, particularly in the services sector.

So we're cautiously optimistic as we move into the summer months.

Gavin> Alright, well stay right there then, we'll see you maybe in the fall and see- <Sounds good, sounds good.> That's Dr.

Joey Von Nessen, a researcher economist at the USC Darla Moore School of Business.

Thanks.

Dr.

Nessen> Thank you, Gavin.

Gavin> Joining me now is Micah Mallace.

He's the president and CEO of the South Carolina Ports Authority for an update on the state's economic engine that is the ports.

Micah, welcome back to the show.

Micah> Thank you so much for having me.

> We spoke with you back in October 2025.

You were fresh on the job back then.

And you gave your first state the ports address to the state's business community in Charleston.

Of course, you're no stranger to the maritime industry and the ports, reaching that position of Chief Commercial Officer before leaving in 2022, for the private industry.

But now you're back.

You've been running the show there now for six months.

So we want to ask you what's been going on, how things have been going, and what are some of the priorities now that you've been on the job for six months?

> Yeah, the industry is at a challenging point right now, impacted by external factors, trade policy, things like that.

And so everyone is trying to figure out kind of what to do, we're, you know, in a, in this three and a half now year freight recession, again, that's market wide.

Not just South Carolina Ports Authority, but, we're trying to compensate for those things.

We're trying to make sure that we service our customers at an exceptional level, give them competitive rates so that we can, win more of their business to offset some of the challenges that we see out there.

Gavin> And, yeah, some of those challenges we talked about before, but obviously some things have cropped up since the six months you've been on the job, including the past month.

We're recording this on April 1st, and we've been in this war with Iran for about a month now, going on that.

How does that, how has that affected shipping operations maybe globally and then also the ramifications just the Port of Charleston itself?

Micah> Yeah, I mean, the global impacts are substantial.

Obviously there are Middle Eastern ports that are, that are, you know, closed effectively.

And so containers are piling up in India and other markets where they're not supposed to be.

So, so there are some pockets of congestion.

For us in particular, for us specifically on the volume side or revenue side of our equation, it equates to 1 or 2 percent of our total volume.

So it's a really minor impact for us commercially.

But what is, what is super impactful is the cost of fuel.

You know, we see diesel about $5 dollars a gallon, that immediately hits the supply chain on the trucking side and of course, hits every shipper who depends on moving freight via truck.

We're seeing some cost pressure of course, because of it as well.

And so it's a challenge globally, obviously.

It's not as much of a challenge for us here on the revenue side, but costs continue to go up.

Gavin> Obviously, it's only been a month, I don't know how quickly those trends develop, but do you see any pullback when it comes in terms of imports and what's coming ashore at this at this point?

Dr.

Nessen> You know, there have been, folks in the industry who have said that war always motivates people to bring inventory into the US early, to avoid any shocks to ensure they have inventory, they can service their customers.

There are others who have said this will dampen demand Because of course, with a fuel cost spike, that's a portion of Americans pocketbooks and they won't have that discretionary income to spend.

It's too soon, I'd say, for us to see.

We have not seen major impacts on our business, nor have we seen, negative impacts, nor have we seen major uptick.

I think it will be a little longer before we know.

Gavin> And then, if I may again, it's April 1st when we're recording this.

So there's still a lot to be determined in terms of how long this will last.

So, it's very flexible, right now.

But when we look at tariffs, those have always been shaking out a lot of ups and downs.

Hard to kind of really pinpoint what's what.

How have those been affecting business.

Are those still really, hurting in any way?

Micah> Yeah, absolutely.

We saw, corporate decision making really slow down dramatically last year.

Our customers who were, you know, kind of on the precipice of, deciding to lease a building in our market or to, you know, buy property to build a manufacturing facility, or whatever.

We saw a pullback on the decision.

Now, the underlying proposal, the underlying financials, everything may have still suggested they should do it, but corporate America kind of said, "Woah, let's take a pause."

Then in the supply chain industry, we saw an impact where when there was the 90-day tariff pause, everyone tried to try to bring goods into the U.S.

all at the same time to avoid tariffs.

And the global supply chain is not made for that kind of big peak, low valley volumes.

And so it was challenging, you know, it was all this surge of volume all at one time.

And then the latter half or the second half of last year was just a very, very slow time.

So tough financially.

So it's, absolutely there have been impacts.

Anecdotally only.

But as we talk to our customers, what we are hearing more and more is people get, maybe not comfortable, but realistic about the fact that tariffs are just going to be a reality of this administration and they're gonna change frequently.

And so we're seeing, we think that we're hearing kind of, a common chorus of opinion that says we have to continue to make decisions, we have to service our customers.

And so we think that, you know, a lot of our customers are going to have more of a... they're getting back to making decisions.

They're getting back to, if they needed capacity in our market, they're going to do it.

And so we're anxiously awaiting that.

We're optimistic that that is going to materialize.

And that's what at least our customers are kinda telling us right now.

Gavin> Has that just compounded what you're talking about with this global freight recession essentially?

I mean, how does that factor into all this?

And really, when do you expect I know you've been talking about trying to see the light at the end of this tunnel, but it doesn't seem like that's coming anytime soon.

Micah> Yeah, it absolutely compounded, the freight recession, you know, tariffs dampened artificially in the short term, dampened demand last year.

And there are a lot of logistics and transportation companies that, you know, after three years of freight recession are really struggling.

Their financial positions have eroded dramatically.

And so the last, the, you know, second half of last year, was tough for them to weather.

We've also seen, you know, U.S.

exports have taken a hit.

You know, the bulk of the exports that go out of, in volume not in value, the volume of exports that exit the U.S.

are commodities, agricultural commodities from the Midwest, forest products, you know, things like that.

And those are low margin business, businesses.

And the, and they're global, they're globally competitive.

So if Asia can source soybeans from the U.S.

and from Brazil, and the U.S.

soybeans have a retaliatory tariff at destination, then Brazilian soybeans all of a sudden are less expensive on a relative basis.

And that's that has, we've seen that in the export market.

> Speaking of the export market, we saw for South Carolina in 2025, export sales reached $38.5 billion.

So it's not just the ports, we're talking about Boeing especially driving a lot of that.

That's a seven year high according to the Department of Commerce.

And 1.5% growth, which is in line with overall U.S.

exports.

How does the ports fit into that picture?

And are y'all maintaining that export growth that we're seeing overall, or is it growing or is it declining?

How does the ports fit in that?

> You know, exports for the ports, we measure in container volume, you know, the number of containers that move across our docks, in other words.

We have seen exports challenged over the last couple of years.

And that's, industrywide, that's not just us.

We have been working very diligently to increase the opportunity for exports, exporters to use our market.

And so we have started to see exports, start to tick up a little bit, maybe too soon to say a full rebound, but moving in the right direction anyway.

So, we're optimistic that we can hopefully continue that.

And that's discrete to our market.

That's things that we're doing to help drive better economics.

So U.S.

exporters, South Carolina exporters, can be globally competitive.

Gavin> And Micah, you were before the Senate Transportation Committee today giving a state of the ports update, and you were talking about driving that growth of the ports.

What would it take for y'all to see, to move up when it comes to top ports, United States, but also to drive more, just vessels calling or more containers being moved through that port?

Micah> You know, the most important thing, there's so many things you have to get right to grow any business, of course.

But for us, if we got nothing else right and grew only one thing, if we grew our localized cargo bays.

So that, in other words, the companies that have facilities that are geographically proximate to us.

So, you know, Mercedes-Benz Vans in North Charleston, or Walmart in Ridgeville, or BMW in Greenville or in Spartanburg, I should say, you know, to the extent that companies choose our market and locate facilities that depend on our port, that is the greatest driver of long term and sustainable growth.

So that is our number one priority.

Now, there are all sorts of other things below that, that we need to get right.

But that's the biggest one.

Gavin> Gotcha.

And you were talking about looking for a reset.

Obviously, this is something you've been trying to do.

There's been a lot of discussions in terms of costs and also, you know, the just the inflationary impacts of so many things, tariffs impacts.

How are you approaching this reset phase now six months into your tenure at ports?

Micah> We are listening to our customers.

I know this sounds so basic, but they'll tell you exactly what they need if you listen.

And so we're being very intentional about asking them and hearing what it is that they need in order to select us versus somewhere else.

We're being very, very aggressive in then solving for whatever it is that they're asking on a very, individualized basis.

So one company may require, one potential customer may require one thing, another needs something totally different.

And we're trying to solve for both.

So we're being very intentional on that.

And the second piece of it is, like any business in a down cycle, which our industry is in, you have to focus on cost.

Because, we're in a commoditized business, our customers choose us first and foremost because of the rates that we charge.

And so, if we are to be competitive, then our rates need to be competitive, our rates are going to be competitive, then our costs need to be lower.

And so we're working on cost.

We're working on finding ways to do exactly what we do today, service level wise, for less.

That's, that's, you know, the reality when you're in this part of the cycle.

Gavin> And no one's calling for a recession, but it seems like every other day it seems like people fret that there could be one.

What would that do to your industry, essentially?

I mean, obviously you're already experiencing so many pressures right now, but how would that directly effect it?

Do you guys, model any of that out in terms of what that could look like?

Micah> We do, we model that out, we have a downside scenario.

I mean, we're very fortunate.

We've got a very, very strong balance sheet.

And so even in our even in our worst kinda, the end of days scenario, we're able to meet our obligations, which is a great place to be.

So we're very fortunate.

But, the distinction that I would make is the industry would really struggle through a demand, a, you know, economy level demand recession because so many of the companies in the supply chain have been just barely making it, have been, you know, you can make it through one year, two year, okay.

But three-and-a-half-years of freight recession if, if an economic, a demand recession were layered on top of that and we went into, you know, a volume decrease in our industry, of say 20% or 15% or something like that, there would be a lot of bankruptcies.

There have been a lot of bankruptcies in our industry, there would be more.

We certainly hope to not see that.

Gavin> For sure, yeah.

Just kinda wrapping up here, I know I briefly saw you at a joint bond review committee meeting in late February.

You were there giving the panel an update on the $550 million Navy Base Intermodal Facility in North Charleston, near the Leatherman Terminal.

What's the latest on this?

It's been a work in progress.

I know there's a lot of negotiations still ongoing with Norfolk Southern and CSX.

Give us an update on that.

Micah> Absolutely.

So we, you're absolutely right.

The number one focus has been working with Norfolk Southern and CSX and Palmetto Railways, to, to deliver the right facility, the right infrastructure, and at the right time.

Of course, everyone has different opinions on that.

And we've been working to, coalesce into one opinion.

I'm really happy to report that we've made a lot of progress.

Actually, one of the two Class One Railroads told, we saw them two weeks ago.

And they shared that we've made more progress in the last three months than we've made in the last three years.

That's an exaggeration, of course.

But it is a top priority of ours, as a fiduciary of the states dollars.

And so we're driving it as fast as we can, and we have partners on the other side that are helping with that.

Gavin> But there's issues over whether you need to pay for some of their upgrades, I guess their infrastructure upgrades, while at the same time trying to save money on the current situation that y'all are paying when it comes to trucking at this point.

So, how do you balance that?

Micah> There are myriad issues.

I think one of the biggest challenges is the, this project is so long in the tooth.

I mean, it was originally, I don't know when it was originally conceived.

Some 20 years ago or so.

It's been in process for, say, 15 years.

It's had different owners, right, Palmetto Rails had it for a while, we have it now.

We're working really jointly together to deliver it at this point.

So maybe it's both of our project, but the project has outlasted the project managers.

And so, what we are trying to compensate for is someone five years ago said, "This infrastructure was required."

Well, maybe today it's not.

And so we're, we're trying to hasten the discussion of saying what is really required, what is really absolutely needed to deliver a world-class facility for our, all of our mutual customers that, that can deliver at the right cost.

And again, I feel very fortunate.

Norfolk Southern, CSX, Palmetto Rails, our various partners of the labor force, etc.

we're all working now really collaboratively on this, and we're making, we're making good progress.

Gavin> Any timeline we can be aware of?

Micah> Oh, I... maybe I'll shy away from a specific timeline.

Gavin> Alright, well, that's Micah Mallace President and CEO of the South Carolina Ports Authority.

Thanks for the update.

Micah> Thank you so much.

Gavin> That's it for us this week, for more news, you can visit YouTube.com/@SCETVNews for South Carolina ETV I'm Gavin Jackson, be well South Carolina.

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