North Carolina will climb slowly out of recession over the next two years, with the state’s metropolitan areas leading the way.
That is the prediction of Mike Walden, William Neal Reynolds professor and North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at North Carolina State University.
Walden prepares an economic outlook for the state every six months. In his North Carolina Economic Outlook: Winter 2009, he sees the end of what some have called the “Great Recession,” the worst economic downturn since the Great Depression of the 1930s.
Walden sees the North Carolina unemployment rate peaking early in 2010 at between 11.3 and 11.5 percent. From that point, unemployment will gradually improve. North Carolina’s unemployment rate stood at 5 percent in December 2007, and Walden does not foresee a return to that number in the near future. The economist sees the jobless rate falling to 9.8 percent by the end of 2010 and to 8.9 percent at the end of 2011.
Economic indicators such as manufacturing output, earnings per worker and retail sales have trended upward in recent months, Walden points out, while the housing market, which sparked the recession, appears to have bottomed out.
Walden sees North Carolina’s economy growing over the next two years, but slowly. Economic growth will be held back by consumer debt, he predicts. Consumers entered the recession with what Walden calls “historically high outstanding debt.” The economist doesn’t think consumers will begin to spend until they’ve paid down some of that debt, and consumer spending tends to drive the economy.
The result will be a slow recovery, although Walden writes, “economic activity in the state is expected to be more robust than in the nation, and this will be a distinct advantage for the state in recruiting and attracting new businesses and enterprises.”
Economic improvement will be uneven across the state. “Job growth will be strongest in the Charlotte, Triangle and Wilmington regions, and several regions will continue to have unemployment rates above 10 percent at the end of 2011,” Walden writes.
Walden’s Economic Outlook is available on line at http://www.ag-econ.ncsu.edu/faculty/walden/publications/outlooknc/ncoutlookwinter09.pdf. Previous Economic Outlooks and other information are available at http://www.ag-econ.ncsu.edu/faculty/walden/walden.htm.