Regional economic forecast: Mild growth despite swirling clouds

There’s no recession imminent in southeastern North Carolina, but the slowdown in growth evident earlier this year has continued, economist William “Woody” Hall Jr. told the 5th annual Economic Outlook Conference at the University of North Carolina Wilmington Tuesday.

Describing colleague Tom Simpson’s description of the national economy as pessimistic, Hall described himself as “less optimistic than I was in the past.”

With lower than expected growth in the second and third quarter, Hall said he now sees regional expansion slowing to about 2.5 percent for 2008 and forecast it would continue at that pace in 2009. In June, he had forecast that growth this year would slow to 2.7 percent from 3 percent in 2007.

Describing the national economy’s road ahead as bumpy, Simpson said, “Right now it looks like third-quarter consumer spending declined at about a 2.5 percent rate.”

Simpson, a retired member of the Federal Reserve’s Board of Governors, pointed out that by July banks had already “tightened (credit) significantly on business loans”.

Hall pointed out, however, that with continued growth southeastern North Carolina’s economy continues to be in better shape than the rest of the state and the U.S. He warned, though, that the national financial turmoil and slowdown are having an effect here.

The senior economist with the Center for Business and Economic Services at UNCW’s Cameron School of Business, Hall has been forecasting the economy of Brunswick, Pender and New Hanover counties for a quarter century, UNCW Chancellor Rosemary DePaolo noted in her welcome to the conference.

Pointing out “Tom (Simpson) suggested in 2009 (the U.S.) could be in a recession,” Hall stated: “We do not anticipate a recession” in southeastern North Carolina.”

Noting his forecast of continued slow growth next year, the economist said, “We don’t see much difference between 2008 and 2009.”

Although the national economy is declining, Hall said, the local economy has added nearly 2,500 jobs since July 2007, a 1.5 percent increase, with the bulk of the increase occurring since the beginning of 2008.

This hasn’t stopped unemployment from growing, he pointed out, noting the July 2008 seasonally adjusted unemployment rate for the three-county area was 5.7 percent. New Hanover County had the lowest July 2008 unemployment rate at 5.2 percent, followed by Pender County with 6 percent and Brunswick County with 6.5 percent.

At the same time, the state unemployment rate was 6.9 percent, higher than the national rate of 6.1 percent, Hall added, pointing out all of these rates are at five-year highs.

He said some local sectors have grown over the past year and are projected to show continued growth over the next 12 to 18 months.

For the year ended in August, air passenger traffic at the Wilmington International Airport was up more than 14 percent from a year earlier, after an almost 27 percent growth in 2007. Room occupancy tax collections for New Hanover County are up almost 3 percent for the year ended in July, after rising more than 9 percent in 2007.

Hall cautioned that his growth forecast assumes a return to stable financial and housing markets and the absence of a major hurricane or terrorism act for the forecast period, explaining such unpredictable events could significantly impact the regional economy.