Transcript economic outlook: at last, moving ahead?

ECONOMIC OUTLOOK:
AT LAST, MOVING AHEAD?
Dr. Michael Walden
Reynolds Distinguished
Professor
North Carolina State
University
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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
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FIRST – CYCLICAL ISSUES
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AGGREGATE PRODUCTION
HAS TOTALLY RECOVERED
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THE JOB MARKET IS ALMOST
HALF WAY BACK
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MANUFACTURING HAS BEEN
A BIG PLUS
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….. AS HAVE EXPORTS
billions of real 2005 $
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THE DOLLAR HAS WEAKENED
AGAINST FOREIGN CURRENCIES
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BUT CONSUMER SPENDING GROWTH LAGS
(COMPARING 2001 AND 2007-09 RECESSIONS AND RECOVERIES)
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MAINLY BECAUSE HOUSEHOLD
WEALTH HAS NOT FULLY RECOVERED
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HOME PRICES HAVE STILL NOT
REBOUNDED
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HOME INVENTORIES HAVE DROPPED
(MONTHS TO SELL EXISTING INVENTORY)
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AND SOME OPTIMISM FROM IMPROVED HOME
SALES AND CONSTRUCTION IN 2011
(sales are of existing units)
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TOTAL INFLATION HAS BEEN VOLATILE
(CPI, total and core)
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GAS PRICE TRENDS
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THE “BITE” FROM GAS PRICES HAS BEEN
INCREASING – BUT NOT YET A RECORD
(GAS SPENDING AS A % OF TOTAL SPENDING)
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FUNDAMENTAL ISSUE – OIL DEMAND
INCREASING FASTER THAN OIL SUPPLY
(WORLD CONDITIONS, MILLIONS OF BARRELS PER DAY)
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COULD RISING GAS PRICES
DERAIL THE RECOVERY?
EVERY 10 CENT RISE
IN GAS PRICE
REDUCES GDP
GROWTH RATE BY
0.2%
GAS PRICE ABOVE
$5/GALLON
WOULD STALL THE
RECOVERY
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WHAT ARE INTEREST RATES SAYING?
(YIELDS ON TREASURY SECURITIES)
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NATIONAL FORECASTS
BETTER GROWTH:
200,000-250,000 JOBS CREATED
PER MONTH
HEADLINE UNEMPLOYMENT RATE
NEAR 8% AT YEAR’S END
2.5% TO 2.75% GDP GROWTH RT
CONSUMERS SPENDING MORE
WILDCARD – ENERGY PRICES AND
POTENTIAL MIDEAST CONFLICT
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GOVERNMENT POLICY
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The Fed’s Monetary Policy
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FISCAL POLICY
(GOV’T PURCHASES OF GOODS AND SERVICES, 2005$)
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STRUCTURAL ISSUES
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FIVE BIG STRUCTURAL ISSUES
GLOBALIZATION AND SKILLS
DEMOGRAPHY AND PUBLIC
SPENDING
EFFICIENT PUBLIC REVENUE
COLLECTION
INFRASTRUCTURE UPGRADING
ENERGY TRANSITION
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NORTH CAROLINA ECONOMY
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BY ONE MEASURE, NC’S ECONOMY HAS
DONE AS WELL OR BETTER THAN THE
NATIONAL ECONOMY IN RECENT YEARS
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NC HAS MORE JOB GROUND TO MAKE UP
(% CHANGE IN SEAS. ADJ. NON-FARM EMPLOYMENT)
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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%
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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%
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NC ECONOMIC FORECAST FOR 2012
BETTER GROWTH
75,000 – 80,000
JOBS CREATED
9% JOBLESS
RATE BY YEAR’S
END
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PREPARING N.C. FOR THE FUTURE
MORE TECH TRAINING IN HIGH
SCHOOL
MOVING STUDENTS THROUGH
COLLEGE FASTER
MORE $ FOR ROADS
REVAMPING MEDICIAD
TAX REFORM
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WITH SOME EXCITING CHALLENGES
Feeding a richer world
Using, but preserving,
our natural resources
Harnessing technology
to solve energy and
medical issues
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