Mike Walden's You
Decide: What are the gains and gaps in our
Dr. Mike Walden
North Carolina Cooperative
Twice a year, I pull out my cloudy crystal ball
and attempt to make some predictions about the
direction and pace of the North Carolina economy. I
just finished my latest effort and, as usual, the
results are a combination of pluses and minuses.
Any economic forecast must begin with the
national economy for the simple reason that,
regardless of where you live in the country, roughly
two-thirds of what happens to commerce is determined
by the ups and downs of the national economy. Here
the news is good, but not great.
Despite a setback during the stormy winter, the
national economy is expanding. The value of all
products and services produced in the country is at
a record high. Factory output is rising, and the
trade deficit with other countries has been cut
almost two-thirds from eight years ago.
there are still worrisome signs. While the total
number of jobs has fully recovered from its
recessionary slide, the unemployment rate continues
to be more than a percentage point higher than
before the recession. A broader measure of
unemployment that includes jobless folks who have
stopped actively looking for work sits near 8
percent, and a measure that adds individuals working
part-time only because they can’t find full-time
work to the unemployed total is around 14 percent.
Nonetheless, these rates are much lower than their
highs during the recession.
is rising and consumers are spending more, but they
are still being cautious and frugal. In one respect
this is good, as it has allowed households to reduce
the overload of debt built up in the late 1990s and
early 2000s. But the trends can also be interpreted
as bad because, in part, they have been caused by
the drop in wage rates (after adjusting for
inflation) received by many workers.
inflation rate that measures price changes in all
products and services was held at bay during the
recession. In fact, it fell in 2009 and has ranged
between 1.5 percent and 2 percent during the past
two years. However, in early 2014 it has been rising
at a noticeably faster clip. Economists are divided
on whether this is a long-run trend.
last stop in the national economy is interest rates.
They remain very low. This is good news for
borrowers but bad news for investors putting their
money in safe places like bank CDs and money market
funds. Predicting interest rate trends is always
hazardous, but a good bet is to expect little change
in rates in the near future.
Now let’s come
home to North Carolina’s economy. Our economic
trends have actually not been very different from
the nation’s. Total production of products and
services in the state is now fully recovered, and,
in fact, the bounce-back in North Carolina was
slightly faster than in the country. Jobs at
businesses (payroll employment) have also increased
a little quicker than nationally since the recession
ended, and our unemployment rates are close to
But, like the nation, we do
have economic challenges. Since the state’s job
market began improving in 2010, job growth has been
fastest in both higher-paying jobs, like
professional and finance positions, and lower-paying
jobs, such as those in the leisure and hospitality
sectors. Job growth has been slowest in
middle-paying jobs, like manufacturing and
As a result, in four of the
last five years average wage rates – adjusted for
inflation – have fallen in North Carolina. So even
if a person has a job, if the wage rate hasn’t keep
up with rising prices, then his or her standard of
living is moving back rather than ahead.
geographic divide has also continued in North
Carolina’s economy. When ranked by economic growth,
the state has three regions. The region with the
fastest job growth during the economic recovery
includes the Triangle, Charlotte, Asheville and
Wilmington, all with total job growth since 2010
between 7 percent and 13 percent.
next region has the Triad, Burlington and
Greenville, with aggregate job growth since 2010 of
near 5 percent. The last grouping includes the down
east communities of Fayetteville and Goldsboro, plus
Jacksonville, Hickory and Rocky Mount. These areas
have had cumulative job growth since 2010 of 3
percent or lower.
So how will North Carolina
finish 2014? As with the nation, I predict some
broad economic gains. Production and jobs will
increase, and more companies will become confident
about the future. The unemployment rate could dip
below 5 percent in fast-growing areas like Asheville
and the Triangle.
Yet there will be
plenty of economic gaps. Many of the jobs created
will be low-paying, and most workers will see little
or no gain in their hourly earnings. Many people
will still have to accept part-time work even though
they want to work full-time. And the economic
improvement won’t be spread evenly across our state.
Several areas will still have jobless rates of 7
percent or higher.
It’s rare – perhaps even
impossible – that everything can improve in the
economy at the same time. Instead, economic change
can best be viewed as a combination of steps forward
together with steps backward. You decide if, after
the steps are taken, we are making progress or not!
Dr. Mike Walden is a William Neal Reynolds Professor
and North Carolina Cooperative Extension
economist in the Department of Agricultural and
Resource Economics of N.C. State University’s
College of Agriculture and Life Sciences. He
teaches and writes on personal finance, economic
outlook and public policy. The College of
Agriculture and Life Sciences communications unit
provides his You Decide column every two weeks.
Previous columns are available at
Related audio files are at
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