JACKSON - The latest survey of business conditions conducted by the Federal Reserve reports that the economy in Mississippi and throughout the Southeast remained soft in March and early April.
The central bank's periodic "Beige Book" report - based on interviews conducted by the 12 regional Fed banks - showed the national economy overall remains mired in the slowdown that hit late last year.
The Atlanta district, which includes Mississippi, said most sectors remain soft: Companies are still reluctant to hire, auto sales have slipped and other retailers are resorting to heavy discounting, commercial lending remains slow, as does most manufacturing industries.
Two questions remain unanswered: How much did uncertainty over the war with Iraq weaken the economy? And will ending the war have an immediate positive impact - particularly on businesses that have postponed investment spending?
"There's still a feeling among the business community that now that uncertainty over the war has been removed, that doesn't remove all the uncertainty over the state of the economy," said John Robertson, senior regional economist for the Federal Reserve Bank of Atlanta.
The Fed's beige book summary of economic activity, which reflects information gathered before April 15, did find some bright spots.
Gulf Coast shipbuilders, of which Northrop Grumman Ship Systems is the largest, reported a large backlog of military orders. Northrop Grumman, the state's largest private employer, plans a $288 million expansion of its Pascagoula and Gulfport shipyards. Mississippi anted up $48 million to help pay for the project, which will create up to 2,000 new jobs.
"While we are actively recruiting for new businesses, we are also dedicated to assisting our existing industries," said Robert Rohrlack, executive director of the Mississippi Development Authority.
In another bright spot, the Southeast region's automotive industry remains robust, with new and expansion projects under way in Alabama, Georgia and Mississippi. Nissan North America Inc. on May 27 will open phase one of its $1.43 billion plant in Madison County.
Manufacturing for the Southeast region should improve the last half of the year, but mostly in durable goods sectors like metal manufacturing and shipyards, says Rajeev Dhawan, director of the economic forecasting center at Georgia State University's Robinson College of Business.
The Southeast's tourism sector is showing mixed reports.
While hotel rates across the region are up from 2002 levels, they still lag those of 2001.
But in Mississippi, overall revenues from tourism - largely dominated by the state's gaming industry - are tracking up 3 to 4 percent.
"Of course, the war affected us for the last six weeks, but projections for this summer are very good," said Darienne Wilson, director of the tourism division of the Mississippi Development Authority.
The state's 29 casinos are coming off two years of nearly flat revenues statewide. This year, casino operators are playing to their strong suits, investing in their growth markets - which for some is along the Gulf Coast instead of the Mississippi River.
Beau Rivage Resorts Inc.'s Biloxi hotel and casino is converting a floor of rooms to suites to entice more gamblers to spend the night. It's also upgrading several of its 14 restaurants there.
"I believe that the economy will be on an upswing in the near future, and we're positioned well to capitalize on it," said George Goldhoff, Beau Rivage's vice president of food and beverage.
Isle of Capri Casinos closed its Tunica casino on the Mississippi River last year because of disappointing revenues, but it's almost doubling the rooms at its Biloxi hotel and casino where sales are strong. "I think the coast is where our growth is going to be," said Bob Megargle, Isle of Capri's senior director of food, beverage and hotel operations.
The state's restaurant industry has struggled this year despite predictions that sales statewide would grow 4.5 percent in 2003.
Restaurant operators say sales have improved the last few weeks, but many are still aggressively marketing, revamping menus, remodeling or offering specials to lure more customers.
"People are concerned about employment prospects, businesses are closing, business travel is down," said Mike Cashion, executive director of the Mississippi Restaurant Association.
In agriculture, Mississippi's outlook is brighter than last year when total farm sales fell more than 14 percent. This year, commodity prices are stronger although poultry prices remained depressed by oversupply.
Bill Herndon, interim head of the Department of Agricultural Economics at Mississippi State University, said earlier this month that 2003 will be a better year for agriculture in the state - "but only marginally so."
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