N.C. State University economist Michael Walden gave Durham officials a generally upbeat outlook for the nation’s economy last week. “The best thing to improve a local economy is to have the national economy do better,” he said, speaking at an annual budget retreat for City Council members and city administrators. The News & Observer reports, he also had some cautions.
“I don’t want you to leave here thinking Walden is pretty optimistic,” he said. An improving housing market and increasing consumer spending are two encouraging signs, Walden said, positive enough to “overwhelm any negatives” from the current budget conflicts in Washington.
There are “wild cards” in play, though, such as a war in the unstable Middle East. “That would be a big game changer,” causing a sudden spike in oil prices that would disrupt economies worldwide.
Some economists predict that the U.S. will be energy-independent by 2020, he said, and that brings an opportunity for North Carolina. North Carolina has the largest offshore oil reserves of any state on the East Coast, he said. “The big source of new income and new jobs for North Carolina is offshore.”
The state economy is actually made up of a number of “micro-economies,” which vary a great deal from place to place, Walden said. Since 2010, Charlotte has had the state’s highest job gain – 7.2 percent – with the Raleigh-Cary metropolitan area next at 6.4 percent. Durham-Chapel Hill is fourth with 6.1 percent. On the other hand, Wilmington has added no jobs. Greenville gained only 1.3 percent, and Winston-Salem just 1.6 percent. Walden estimates the state will gain between 80,000 and 90,000 jobs overall in 2013, but its unemployment rate will finish the year at 8.2 percent.
Manufacturing has been a mainstay in North Carolina’s economy and, nationally, manufacturing output in 2012 was at its highest since 2007. “But we’re doing it with fewer people,” Walden said, contributing to a sluggish revival in employment. To cope with the recession, companies reorganized to keep productivity up while cutting labor costs and, even with recovery, do not need as many employees as before.
Also, factories are becoming places of “a lot of robots, very few people,” he said, in a process similar to the change in agriculture since World War II – production five times as great with a farm-labor force one-fifth the size.
Walden said it’s likely the same scenario will play out in other sectors of the economy. “You could argue we’re never going to see 4.5 percent unemployment (as it was in 2007),” he said. “If you look at people who talk about the future … they’re talking about robots.” Read More.