Transcript North Carolina Economic Forecast.(English)

TIAA-CREF North Carolina
Economic Forecast
March 11, 2008
Annual Growth Rates In Real GSP
FORECAST HIGHLIGHTS
• For 2007, NORTH CAROLINA real GSP is forecast to
increase by 2.6 percent over the 2006 level.
6
5
4
3
5.4
2
3.5
4.3
1
2004
2005
2006
2.6
2.5
2007f
2008f
•Nine of the state’s eleven economic sectors are forecast to
experience growth during 2007. The sectors with the strongest
expected growth forecasts are mining with a projected real
growth rate of 7.2 percent, government with a projected real
growth rate of 5.9 percent, and services with a projected real
growth rate of 5.4 percent.
For 2007 NORTH CAROLINA establishments added 68,200
net jobs, and increase of 1.7 percent over the 2006 level.
GSP/Gross State Product is a yardstick that measures
the total output of a state’s economy during a given
year period. It is analogous to the U.S. Gross
Domestic Product (GDP).
• Six of the state's ten nonagricultural sectors of the economy
experienced positive employment growth during 2007.
• The NORTH CAROLINA unemployment rate was at 5.0
percent in December of 2007, the same as the U.S. rate.
• For 2008, NORTH CAROLINA real GSP is forecast to
increase by 2.5 percent over the 2007 level.
Year-End Seasonally Adjusted North Carolina
Unemployment Rates
7
6
5
4
3
2
1
5.3
5.0
4.9
5.0
4.9
2004
2005
2006
2007
2008f
• Eight of the state’s eleven economic sectors are forecast to
experience growth during 2008. The sectors with the strongest
expected growth forecasts are services with a projected real
growth rate of 5.6 percent, retail trade with a projected real
growth rate of 4.4 percent, and wholesale trade with a
projected real growth rate of 3.9 percent;
• For 2008 NORTH CAROLINA establishments are forecast
to add 49,600 net jobs, and increase of 1.2 percent over the
2007 level.
QUARTERLY GROWTH RATES IN
REAL GSP
2007 GSP
Gross State Product (GSP) is expected to reach a level of
395,501.9 million in 2007. Real (inflation adjusted) GSP is
expected to increase by 2.6 percent over the 2006 level. The
GSP growth expected in 2007 is weaker than the growth rate of
4.3 percent experienced during 2006.
6
5
4
3
2
1
2.3
2007 I
2.8
2.0
1.0
2007 II
2007 III 2007 IVf
2007 Highlights
2007 *
Percent
Change
Current Dollars
Total Gross Product
395,501.9
5.6
Constant (2000 Dollars)
Total Gross Product
Farm
Agricultural Services
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWUI
Wholesale Trade
Retail Trade
FIRE
Services
Government
334,716.9
2,581.8
843.0
285.5
13,147.2
71,455.5
30,949.8
40,505.7
27,590.8
18,850.4
23,907.2
66,515.4
71,067.1
38,473.1
2.6
-3.7
26.3
7.2
1.7
-0.5
-1.0
0.0
0.8
4.7
1.9
1.9
5.4
5.9
2004 IVf
* millions of dollars
Overall, the North Carolina economy is expected to grow
during all four quarters of 2007. During the first quarter GSP
increased by an annualized real growth rate of 2.3 percent.
During the second quarter, GSP growth slowed down to an
annualized real growth rate of 1.0 percent. In the third quarter
GSP growth increased to an annualized rate of 2.0 percent. In
the fourth quarter, North Carolina GSP growth is expected to
continue to increase recording an annualized real growth rate of
2.8 percent.
The roller coaster performance experienced during the year
is a result of a couple of dramatic events. First, during the
summer, rising gasoline prices took a bite out of consumer
incomes. Second, by late summer into early fall the sub-prime
credit problem began to surface. Both of these issues have
affected consumer behavior. Rising gasoline prices are taking
income out of consumer’s pockets and slowing purchases in
other sectors and the sub-prime credit scare are negatively
affecting consumer’s confidence to purchase big-ticket items.
The Consumer Confidence Index has been in steady decline
since July of 2007. The February number stands at 75.0 down
over 35 points since July.
These two factors together have slowed the North Carolina
economy during 2007 and are likely to continue slowing the
economy into 2008.
2007 GSP Sector Analysis
2007 Total Real GSP 2.6%
1.0
0.1
3.9
Percent of Total Real GSP
9.3
12.2
Agriculture 2.3
Mining 7.2
Construction 1.7
Durables -1.0
Nondurables 0.0
TWUI 0.8
8.2
Wholesale
Trade
Wholesale
Trade
5.0 4.7
5.6
Retail Trade 1.9
7.1
19.9
21.2
11.5
FIRE 1.9
Services 5.4
Government 5.9
Percent of Real Sector Growth
The chart to the left presents the contributions of each
major economic sector to North Carolina’s Gross State
Product (GSP). The real (inflation adjusted) growth rate for
2007 is forecast to be 2.6 percent. Projected real growth
rates for each sector (displayed in black type) are plotted on
the horizontal axis. Projected percentages of GSP contributed
by each sector (displayed in green type) are plotted on the
vertical axis. The resulting rectangles show the expected
weighted importance of each sectors' growth during 2007.
All of the sector information presented in the table to the left
is based on the new North American Industry Classification
System (NAICS) definitions.
Nine of the state’s eleven economic sectors are forecast to
experience growth during 2007. The sectors with the
strongest expected growth forecasts are mining with a
projected real growth rate of 7.2 percent, government with a
projected real growth rate of 5.9 percent; services with a
projected real growth rate of 5.4 percent, and wholesale trade
with a projected real growth rate of 4.7 percent.
Five other sectors are expected to experience growth
during 2007 but at rates less that the overall state growth rate
of 2.6 percent. These sectors are agriculture with a projected
real growth rate of 2.3 percent; finance, insurance, and real
estate (FIRE) with a projected real growth rate of 1.9
percent; retail trade with a projected real growth rate of 1.9
percent; construction with a projected real growth rate of 1.7
percent; and transportation, warehousing, utilities, and
information (TWUI) with a projected real growth rate of 0.8
percent.
Nondurable goods manufacturing is projected to be flat
while durable goods output is expected to decline by 1.0
percent
2008 GSP
QUARTERLY GROWTH RATES IN
FORECASTED REAL GSP
6
5
4
3
2
1
3.0
2.3
2008 I
2.5
2.8
2008 II 2008 III 2008 IV
2008 Highlights
2008 *
Percent
Change
Current Dollars
Total Gross Product
415,092.2
5.0
Constant (2000 Dollars)
Total Gross Product
Farm
Agricultural Services
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWUI
Wholesale Trade
Retail Trade
FIRE
Services
Government
342,926.0
2,636.3
872.8
293.8
13,120.5
70,851.3
30,421.8
40,429.5
28,532.8
19,594.8
24,969.2
67,985.1
75,056.6
39,012.9
2.5
2.1
3.5
2.9
-0.2
-0.8
-1.7
-0.2
3.4
3.9
4.4
2.2
5.6
1.4
* millions of dollars
Gross State Product (GSP) is expected to reach a level of
415,092.2 million in 2008. Real (inflation adjusted) GSP is
expected to increase by 2.5 percent over the 2007 level. The
growth rate for 2008 is expected to be slightly weaker than
the growth rate of 2.6 percent experienced during 2007.
For 2008, first quarter GSP is expected to increase by an
annualized real growth rate of 2.3 percent. During the second
quarter, GSP is expected to increase by an annualized real
rate of 3.0 percent. In the third quarter, GSP growth is
expected to drop off and record an annualized real growth
rate of 2.5 percent. In the fourth quarter of 2008, GSP growth
is expected to pick-up, and reach an annualized real rate of
2.8 percent.
This expansion, which began in November of 2001, is
now 75 months long. The average of the 10 post World War
Two expansions has been 57 months. Only 3 have been
longer than the current expansion. The longest expansion
was during the 1990’s when the economy grew for 120
months. Today the economy is in a position to go either way.
Rising energy prices and the sub-prime related credit
crunch have consumers on the rocks. Consumer spending
represents 70 percent of U.S. GDP, so if consumers are
nervous the economy is in trouble. Since July of 2007,
consumer confidence has fallen dramatically. The February
number is 75.0. Many economists believe this is the recipe
for a recession. However, it is still too early to call. If the
“Fed” is successful in alleviating the credit problem it is
possible for the economy to rebound from its sluggish
performance during late 2007.
2008 GSP Sector Analysis
Percent of Total Real GSP
2008 Total Real GSP Growth 2.5 %
1.0
0.1
3.8
Agriculture 2.5
Mining 2.9
Construction -0.2
8.9
Durables -1.7
11.8
8.3
5.7
7.3
19.8
21.9
11.4
Nondurables -0.2
TWUI 3.4
Wholesale Trade 3.9
Retail Trade 4.4
FIRE 2.2
Services 5.6
Government 1.4
Percent of Real Sector Growth
The chart to the left presents the projected contributions of
each major economic sector to North Carolina’s Gross State
Product (GSP). The real (inflation adjusted) growth rate for
2008 is forecast to be 2.5 percent. Projected real growth
rates for each sector (displayed in black type) are plotted on
the horizontal axis. Projected percentages of GSP contributed
by each sector (displayed in green type) are plotted on the
vertical axis. The resulting rectangles show the expected
weighted importance of each sectors' growth during 2007.
All of the sector information presented in the table to the left
is based on the new North American Industry Classification
System (NAICS) definitions.
Eight of the state’s eleven economic sectors are forecast
to experience growth during 2008. The sectors with the
strongest expected growth forecasts are services with a
projected real growth rate of 5.6 percent; retail trade with a
projected real growth rate of 4.4 percent; wholesale trade
with a projected real growth rate of 3.9 percent;
transportation, warehousing, utilities, and information
(TWUI) with a projected real growth rate of 3.4 percent;
mining with a projected real growth rate of 2.9 percent; and
agriculture with a projected real growth rate of 2.5 percent.
Two other sectors are expected to experience growth but
at rates less than the overall growth rate of 2.5 percent. These
sectors are finance, insurance, and real estate (FIRE) with a
projected real growth rate of 2.2 percent; and government
with a projected real growth rate of 1.4 percent.
Three sectors, durable goods manufacturing, nondurable
goods manufacturing, and construction are expected to
experience an output decline during 2008
2007 Employment Sector Analysis
2007 Year-End Employment Trends
0.2
Percent of Total Employment
6.2
Mining -1.5
Construction 3.1
7.0
Durables –1.5
6.0
Nondurables -2.6
5.0
TWUI -0.3
4.3
11.1
5.2
Wholesale Trade 0.7
Retail Trade 1.9
The sector employment analysis presented on this page is
based on the new North American Industrial Classification
System (NAICS). Seasonally adjusted nonagricultural
employment in North Carolina reached 4,122,000 persons by
December 2007, an increase of 1.7 percent over the employment
level in December 2006. The employment growth added 68,200
net jobs to the state's economy during the year.
Six of the state's ten nonagricultural sectors of the economy
experienced positive employment growth during 2007. The
sectors that displayed the strongest employment growth rates in
2007 were services at 3.6 percent, construction at 3.1 percent,
and FIRE at 3.0 percent.
FIRE 3.0
2007 Employment Highlights
Year-End*
38.5
16.4
Services 3.6
Government 0.2
Percent Change Total
Employment Increase 1.7 %
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWUI
Wholesale Trade
Retail Trade
FIRE
Services
Government
*thousands
4,122.0
6.7
255.6
539.2
290.4
248.8
204.3
176.7
458.6
215.9
1,588.0
677.0
of persons
Percent
Change
1.7
-1.5
3.1
-2.0
-1.5
-2.6
-0.3
0.7
1.9
3.0
3.6
0.2
2008 Year-End Employment Trends
Percent of Total Employment
0.1
6.1
Mining -9.0
Construction 0.3
6.8
Durables -1.8
5.6
Nondurables -5.0
4.9
4.3
TWUI 0.3
Wholesale Trade 1.9
11.2
Retail Trade 1.9
5.3
FIRE 2.6
2008 Employment Sector Analysis
The sector employment analysis presented on this page are
based on the new North American Industrial Classification
System (NAICS). Seasonally adjusted nonagricultural
employment in North Carolina is expected to reach 4,171,600
persons by December 2008, an increase of 1.2 percent over the
employment level expected in December 2007.
The
employment growth during 2008 is expected to add 49,600 net
jobs to the state's economy.
Six of the state's ten nonagricultural sectors of the economy
are expected to experience positive employment growth during
2008. The sectors that are expected to display the strongest
employment growth rates in 2007 are services at 3.4 percent,
FIRE at 2.6 percent, and wholesale and retail trade both at 1.9
percent.
2008 Employment Highlights
Year-End*
39.3
16.2
Services 3.4
Government -0.1
Percent Change Total
Employment Increase 1.2%
Total Establishment
Employment
Mining
Construction
Manufacturing
Durable Goods
Nondurable Goods
TWUI
Wholesale Trade
Retail Trade
FIRE
Services
Government
*thousands
4,171.6
6.1
256.3
521.6
285.2
236.4
204.9
180.1
467.3
221.6
1,641.3
676.5
of persons
Percent
Change
1.2
-9.0
0.3
-3.3
-1.8
-5.0
0.3
1.9
1.9
2.6
3.4
-0.1
2007 NORTH CAROLINA
UNEMPLOYMENT RATES
7
6.5
6
5.5
5
4.5
NC Seasonally Adjusted
4
3.5
US Seasonally Adjusted
3
2.5
2
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
FORECAST reports historical seasonally adjusted monthly unemployment rates for North Carolina and the United States and
forecasts the seasonally adjusted monthly unemployment rate for North Carolina. The seasonal adjustment accounts for variations in
labor market conditions that cause regular fluctuations in the unemployment level each month.
The graph at the top of this page provides a summary of the monthly unemployment rates for 2007. The solid green line represents
the North Carolina seasonally adjusted historic unemployment rate. The seasonally adjusted unemployment rate for the United States is
represented by the solid blue line. The seasonally adjusted rates for the United States and North Carolina can be directly compared and
provide more reliable estimates than the unadjusted rates.
The North Carolina seasonally adjusted unemployment rate began the year at 4.5 percent, the same as the United States rate. By
July, the North Carolina rate had risen to 5.0, while the United States rate was still at 4.6 percent. During the fall the North Carolina
unemployment rate decline 4.8 percent, 0.1 percent above the United States rate. The North Carolina unemployment rate closed the
year at 5.0 percent the same as the U.S. rate.