Transcript NC Economic Outlook

THE ECONOMY IN 2015:
LIFT-OFF?
Dr. Mike Walden
Reynolds
Distinguished
Professor
North Carolina State
University
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THE NATIONAL ECONOMY
GDP and Employment:
back to prerecessionary levels
Growth rates have
accelerated
Confidence up
2
REASONS FOR IMPROVEMENT
Rebound from initial
slow growth
Housing improvement
Wealth upswing
Continued FED stimulus
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AND, THE PLUNGE IN GAS PRICES
Down 50% since summer
Like a $225 billion tax cut
Doubling of US oil supply in
six years
Slowing of usage growth in
Asia
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THE FUTURE OF GAS PRICES
Saudis have not cut
their supply
Expect US supply to
be curtailed
Some rebound in
price in 2015
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THE HOUSING MARKET IN 2015
IMPROVEMENT HAS SLOWED
PRE-RECESSIONARY LEVELS
NOT FORESEEN
WILL THE MILLENNIALS BUY?
6
INFLATION AND INTEREST RATES
INFLATION IS STILL TAME
(IS IT TOO LOW?)
SURPRISE: DROP IN
LONG-RATES IN 2015
PERMANENT LOW?
7
RISING INTERNATIONAL VALUE OF THE $
WILL INCREASE
THE PRICE OF
U.S. EXPORTS
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POLICY IN 2015: ALL EYES ON
THE FEDERAL RESERVE
MORTGAGE BUYING
HAS STOPPED
RAISING SHORT-TERM
INTEREST RATES IS
NEXT
WHEN?
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NATIONAL OUTLOOK
3% GDP GROWTH
3 MILLION PAYROLL JOBS
5.0% TO 5.5% HEADLINE
JOBLESS RATE
INFLATION AND INTEREST
RATES STILL LOW
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NATIONAL ECONOMIC ISSUES
Missing middle income jobs
Slow wage and salary gains
Technological unemployment
Rising dependency rate
Federal fiscal balance
Infrastructure improvement
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WHAT COULD GO WRONG?
EXPANDED UKRANIAN
CONFLICT
CHINESE REAL ESTATE
IMPLOSION
MIDDLE EAST: IRAN;
TERRORIST ATTACK IN
SAUDI ARABIA
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NORTH CAROLINA ECONOMY
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NC PAYROLL JOB GROWTH
120000
100000
80000
60000
40000
20000
0
2010
2011
2012
2013
2014
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ALTERNATIVE MEASURES OF THE
NORTH CAROLINA UNEMPLOYMENT RATE
2007: HEADLINE, 4.5%;
U5, 5.6%;
U6, 8.5%
17
15
%
13
11
9
7
5
headline
U5
U6
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MIDDLE-INCOME JOBS HAVE BEEN THE
SLOWEST GROWING DURING THE RECOVERY
Financial Serv
Information
Prof/Bus Serv
Manufacturing
Gov't
US
Construction
NC
Educ/Hlth Care
Trd/Tranp/Util
Other Serv.
Leisure/Hosp.
-10
-5
0
5
10
15
20
25
%
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GEOGRAPHIC ECONOMIC INEQUALITY ALSO
CONTINUES IN NORTH CAROLINA
Raleigh/Cary
Charlotte
Asheville
North Carolina
Durham-CH
Wilmington
Burlington
Greenville
Greensboro-HP
Winston-Salem
Jacksonsville
Hickory
Goldsboro
Fayetteville
Rocky Mount
15.8%
14.1%
10.4%
9.5%
8.6%
8.2%
7.9%
6.3%
5.7%
5.4%
4.6%
3.2%
2.1%
0.6%
-2.0%
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2007 feb
2007 may
2007 aug
2007 nov
2008 feb
2008 may
2008 aug
2008 nov
2009 feb
2009 may
2009 aug
2009 nov
2010 feb
2010 may
2010 aug
2010 nov
2011 feb
2011 may
2011 aug
2011 nov
2012 feb
2012 may
2012 aug
2012 nov
2013 feb
2013 may
2013 aug
2013 nov
2014 feb
2014 may
NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC
INDICATORS
105
100
95
90
85
80
75
70
Source: calculations by Dr. Michael Walden
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NORTH CAROLINA OUTLOOK
CONTINUED GROWTH
125,000 PAYROLL JOBS
5.0% TO 5.5% HEADLINE
JOBLESS RATE
AUTO ASSEMBLY PLANT?
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IN SUMMARY
2015 WILL BE A “GOOD YEAR”
MORE HOUSEHOLDS AND
BUSINESSES WILL “GET
AHEAD”
CHALLENGES RELATED TO
GROWTH RATHER THAN
DECLINE!
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