economic outlook: at last, moving ahead?

download report

Transcript economic outlook: at last, moving ahead?

ECONOMIC OUTLOOK:
AT LAST, MOVING AHEAD?
Dr. Michael Walden
Reynolds Distinguished
Professor
North Carolina State
University
1
USEFUL TO THINK OF ECONOMIC
ISSUES IN TWO PARTS
1. SHORT-RUN “CYCLICAL”
ISSUE RELATED TO THE
RECESSION AND RECOVERY
2. LONG-RUN “STRUCTURAL”
ISSUES RELATED TO OUR
ECONOMIC PATH FOR NEXT
50 TO 75 YEARS
2
FIRST – CYCLICAL ISSUES
3
AGGREGATE PRODUCTION
HAS TOTALLY RECOVERED
4
THE JOB MARKET IS ALMOST
HALF WAY BACK
5
MANUFACTURING HAS BEEN
A BIG PLUS
6
….. AS HAVE EXPORTS
billions of real 2005 $
7
THE DOLLAR HAS WEAKENED
AGAINST FOREIGN CURRENCIES
8
BUT CONSUMER SPENDING GROWTH LAGS
(COMPARING 2001 AND 2007-09 RECESSIONS AND RECOVERIES)
9
MAINLY BECAUSE HOUSEHOLD
WEALTH HAS NOT FULLY RECOVERED
10
HOME PRICES HAVE STILL NOT
REBOUNDED
11
HOME INVENTORIES HAVE DROPPED
(MONTHS TO SELL EXISTING INVENTORY)
12
AND SOME OPTIMISM FROM IMPROVED HOME
SALES AND CONSTRUCTION IN 2011
(sales are of existing units)
13
TOTAL INFLATION HAS BEEN VOLATILE
(CPI, total and core)
14
GAS PRICE TRENDS
15
THE “BITE” FROM GAS PRICES HAS BEEN
INCREASING – BUT NOT YET A RECORD
(GAS SPENDING AS A % OF TOTAL SPENDING)
16
FUNDAMENTAL ISSUE – OIL DEMAND
INCREASING FASTER THAN OIL SUPPLY
(WORLD CONDITIONS, MILLIONS OF BARRELS PER DAY)
17
COULD RISING GAS PRICES
DERAIL THE RECOVERY?
EVERY 10 CENT RISE
IN GAS PRICE
REDUCES GDP
GROWTH RATE BY
0.2%
GAS PRICE ABOVE
$5/GALLON
WOULD STALL THE
RECOVERY
18
WHAT ARE INTEREST RATES SAYING?
(YIELDS ON TREASURY SECURITIES)
19
NATIONAL FORECASTS
BETTER GROWTH:
200,000-250,000 JOBS CREATED
PER MONTH
HEADLINE UNEMPLOYMENT RATE
NEAR 8% AT YEAR’S END
2.5% TO 2.75% GDP GROWTH RT
CONSUMERS SPENDING MORE
WILDCARD – ENERGY PRICES AND
POTENTIAL MIDEAST CONFLICT
20
GOVERNMENT POLICY
21
The Fed’s Monetary Policy
22
FISCAL POLICY
(GOV’T PURCHASES OF GOODS AND SERVICES, 2005$)
23
STRUCTURAL ISSUES
24
FIVE BIG STRUCTURAL ISSUES
GLOBALIZATION AND SKILLS
DEMOGRAPHY AND PUBLIC
SPENDING
EFFICIENT PUBLIC REVENUE
COLLECTION
INFRASTRUCTURE UPGRADING
ENERGY TRANSITION
25
NORTH CAROLINA ECONOMY
26
BY ONE MEASURE, NC’S ECONOMY HAS
DONE AS WELL OR BETTER THAN THE
NATIONAL ECONOMY IN RECENT YEARS
27
NC HAS MORE JOB GROUND TO MAKE UP
(% CHANGE IN SEAS. ADJ. NON-FARM EMPLOYMENT)
28
THE NORTH CAROLINA FARM ECONOMY HAS
GROWN FASTER IN RECENT YEARS
FROM 2006-2010
NC AG SECTOR OUTPUT
VALUE UP 29%
TOTAL NC OUTPUT
VALUE UP 0.1%
29
JOB GAINS (%) IN METRO AREAS SINCE
BOTTOM OF JOB RECESSION (Feb. 2010)
Raleigh-Cary
Asheville
Burlington
Charlotte
Fayetteville
Greensboro-HP
Durham-CH
5.2%
4.7%
4.5%
4.3%
2.9%
2.9%
2.7%
Goldsboro
Greenville
Hickory
Winston-Salem
Rocky Mount
Jacksonville
Wilmington
1.9%
1.6%
1.5%
1.0%
0.7%
-0.2%
-1.0%
30
31
NC ECONOMIC FORECAST FOR 2012
BETTER GROWTH
75,000 – 80,000
JOBS CREATED
9% JOBLESS
RATE BY YEAR’S
END
32
PREPARING N.C. FOR THE FUTURE
MORE TECH TRAINING IN HIGH
SCHOOL
MOVING STUDENTS THROUGH
COLLEGE FASTER
MORE $ FOR ROADS
REVAMPING MEDICIAD
TAX REFORM
33
WITH SOME EXCITING CHALLENGES
Feeding a richer world
Using, but preserving,
our natural resources
Harnessing technology
to solve energy and
medical issues
34