2. If you’re tweeting this event,
use #EOB13 as a hashtag

3. Chris Barnes, Vice Chair
PNC Bank

10. Master Gold Sponsors

11. Master Gold Sponsors

12. Justin Purdy
Time Warner Cable Business Class

13. Dr. Michael Walden
William Neal Reynolds Distinguished Professor
North Carolina State University

14. ECONOMIC OUTLOOK:
ARE HAPPIER DAYS HERE?
Dr. Mike Walden
Reynolds
Distinguished
Professor
North Carolina State
University
14

15. USEFUL TO THINK OF ECONOMIC
ISSUES IN TWO PARTS
1. SHORT-RUN “CYCLICAL”
ISSUE RELATED TO THE
RECESSION AND RECOVERY
2. LONG-RUN “STRUCTURAL”
ISSUES RELATED TO OUR
ECONOMIC PATH FOR NEXT
50 TO 75 YEARS
15

16. AGGREGATE PRODUCTION
HAS TOTALLY RECOVERED
16

17. THE JOB MARKET IS ALSO
COMING BACK
17

18. MANUFACTURING HAS BEEN
A BIG PLUS
18

19. ….. AS HAVE EXPORTS
billions of real 2005 $
19

20. BANK LOANS HAVE ALSO INCREASED
(BILLIONS OF DOLLARS)
20

21. AND CONSUMERS ARE SPENDING MORE
(INFLATION-ADJUSTED PERCENTAGE CHANGES)
21

22. AN IMPORTANT FACTOR IS THE
IMPROVEMENT IN HOUSEHOLD WEALTH
22

23. AND HOUSEHOLDS HAVE REDUCED DEBT
BIG QUESTION:
ARE WE THERE YET?
23

24. HOME PRICES HAVE STOPPED DECLINING
24

25. HOME INVENTORIES HAVE DROPPED
(MONTHS TO SELL EXISTING INVENTORY)
25

26. AND SOME OPTIMISM FROM IMPROVED HOME
SALES AND CONSTRUCTION
(sales are of existing units and permits for planned units)
26

27. TOTAL INFLATION HAS BEEN VOLATILE, BUT TAME
(CPI, total, annual % chg.)
27

28. GAS PRICE TRENDS
28

29. THE “BITE” FROM GAS PRICES HAS BEEN
INCREASING – BUT NOT YET A RECORD
(GAS SPENDING AS A % OF TOTAL SPENDING)
29

30. FUNDAMENTAL ISSUE – OIL DEMAND
INCREASING FASTER THAN OIL SUPPLY
(WORLD CONDITIONS, MILLIONS OF BARRELS PER DAY)
30

31. COULD RISING GAS PRICES
DERAIL THE RECOVERY?
EVERY 10 CENT RISE
IN GAS PRICE
REDUCES GDP
GROWTH RATE BY
0.2%
GAS PRICE ABOVE
$5/GALLON
WOULD STALL THE
RECOVERY
31

32. INTEREST RATES CONTINUE AT HISTORIC LOWS
(YIELDS ON TREASURY SECURITIES)
32

33. THE “TRI-FECTA” OF IMPROVEMENT
BETTER HOUSING
MARKET
BETTER HOUSEHOLD
NET WORTH
MORE JOBS
33

34. NATIONAL FORECASTS
200,000 – 250,000 JOBS CREATED
PER MONTH
2.0% TO 2.5% GDP GROWTH RT
CONSUMERS SPENDING MORE
DELEVERAGING ALMOST COMPLETE
WILDCARD – ENERGY PRICES AND
POTENTIAL MIDEAST CONFLICT
34

35. KEY ECONOMIC POLICY ISSUES
DEBATE OVER LONG RUN
FISCAL PLAN
* tax rates
* “tax expenditures”
* entitlements
* defense
35

36. GOVERNMENT POLICY
36

37. The Fed’s Monetary Policy
37

38. FISCAL POLICY HAS ADDED TO THE DEBT
(% of GDP)
38

39. GOVERNMENT CYCLICAL POLICY QUESTIONS
For monetary policy:
- creating another “bubble”?
- creating more inflation?
- exit strategy?
For fiscal policy:
- more stimulus needed?
- long run fiscal plan needed?
- or austerity needed?
39

40. FIVE BIG STRUCTURAL ISSUES
GLOBALIZATION AND SKILLS
DEMOGRAPHY AND PUBLIC
SPENDING
EFFICIENT PUBLIC REVENUE
COLLECTION
INFRASTRUCTURE UPGRADING
ENERGY TRANSITION
40

41. NORTH CAROLINA ECONOMY
41

42. USING GDP, NC’S ECONOMY HAS RECENTLY
ACCELERATED FASTER THAN THE NATION’S
42

43. NC’s ECONOMIC RIDE IS BUMPIER
(% CHANGE IN SEAS. ADJ. NON-FARM EMPLOYMENT)
43

44. Metro NC Job Gains Since Bottom of Recession
(seasonally-adjusted)
Charlotte 7.2%
Raleigh-Cary 6.4%
Burlington 5.4%
Durham-CH 5.1%
Asheville 4.6%
Greensboro-HP 3.7%
Rocky Mount 3.6%
Fayetteville 3.6%
Hickory 2.6%
Jacksonville 2.5%
Goldsboro 2.1%
Winston-Salem 1.6%
Greenville 1.3%
Wilmington 0.0% 44

45. 45

46. NC ECONOMIC FORECAST FOR 2013
BETTER GROWTH
80,000 – 90,000
JOBS CREATED
8.2% JOBLESS
RATE BY YEAR’S
END
46

47. LONGER-RUN NORTH CAROLINA GROWTH PROSPECTS
MANUFACTURING REVIVAL
CONSTRUCTION SURGE
EDUCATION “BUMPER CROP”
RETIREE INFLUX
400,000 NET NEW JOBS
BY 2017
47

48. PUBLIC ISSUES FOR N.C.’s LEADERS
TAX “REFORM”
TECH TRAINING
$ FOR ROADS – WHERE?
MEDICAID
48

49. Aaron Nelson, President and CEO
2013 ECONOMIC CONDITIONS
SURVEY RESULTS

50. How has the recession affected your organization?
60% 56%
50% 49% 52%
50% 44%
39% 39%
40%
31%
30%
20%
17%
12%
10% 6% 5%
0%
Q4 2008 Q2 2009 Q1 2012 Q1 2013
Negatively Not Much Positively

51. Has the current economic environment negatively affected
your plans for growth over the next 12 months?
80% 75.0%
70%
53.3%
60% 55.6% 49.5% 50.5%
44.4% 46.7%
50%
40% YES
30% 25.0%
NO
20%
10%
0%
Q4 2008 Q2 2009 Q1 2012 Q1 2013

52. Which answer most closely matches your current perception of
the economic environment over the next 12 months?
Environment is improving and I 69.0%
expect my organization to do well 66.3%
Environment will stay the same and I 23.9%
do not expect to improve or decline 24.7%
Environment is declining and expect 7.0%
my organization to contract 7.9%
Packing it up 0.0%
1.1%
0% 20% 40% 60% 80%
Q1 2013 Q1 2012

53. Do you have plans to increase or reduce your
workforce in the next 12 months?
70% 58.9% 58.9%
60%
50%
39.7%
35.8%
40%
30%
20% 14.0%
5.3%
10%
0%
Add workers No reduction or Reduce Workforce
addition
Q1 2012 Q1 2013

54. If you could change one thing locally- other than general economic conditions – to
help your organization thrive, what would it be?

61. Master Gold Sponsors

62. Master Gold Sponsors

63. Thank you for attending the 2013
Economic Outlook Briefing!
See what’s coming up
at the Chamber
at carolinachamber.org/events