North Carolina business leaders heard Monday from lawmakers, an economist and others about the grim picture for the state and national economies in the coming year.
The Herald-Sun reported economist Mark Vitner and former UNC System President Erskine Bowles had some sobering news on Monday for those who were hoping the new year — and new decade — would lead to a way out of the economic doldrums.
The days of the kind of economic expansion the state saw in previous decades are gone, Vitner said at the 9th Annual Economic Forecast Forum hosted by the N.C. Bankers Association and N.C. Chamber of Commerce. Projected economic and job growth are not keeping up with population growth, and the state actually has less non-farm employment than a decade ago, according to Vitner. Moreover, the picture for this decade doesn’t look much better. “I don’t know that we’ll see a 4.6-percent unemployment rate this decade,” said Vitner, chief economist of Wells Fargo Securities.
The state’s unemployment rate increased slightly to 9.7 percent in November, but according to Vitner’s economic forecast, improvements in the unemployment rate have been mainly a result of a decline in the labor force. Employment has increased only modestly.
As for the housing market, Vitner projected that it will keep struggling as prices continue to fall and the market absorbs foreclosed properties. “It’s going to be tough for the next few months,” Vitner said.
Bowles, who retired at the end of 2010 as president of the UNC System, also spoke at Economic Forecast Forum on the need to cut the federal budget. Currently, Bowles said, mandatory spending like Medicare and Social Security comprise the total of the federal budget, and spending for infrastructure and education has had to come from debt. “This buildup in debt is our biggest national security problem,” Bowles said. “We can’t grow out way out of this problem.”
Bowles, who is co-chairman of a presidentially appointed deficit reduction commission with Wyoming Sen. Alan Simpson, has proposed a plan to cut the budget deficit by nearly $4 trillion through 2020, reducing the deficit to 2.3 percent of GDP by 2015. Bowles said balancing the federal budget will require a mix of growth, cuts and tax increases, but he said the General Assembly should be able to handle its deficit through cuts alone.
State Budget Director Charlie Perusse, Sen. Peter Brunstetter, R-Forsyth, and Rep. Harold Brubaker, R-Randolph, provided an overview of the state budget picture during the forum.
According to a WRAL.com analysis, the lawmakers and Perusse said the 2011-12 state budget would include $3.7 billion in cuts to erase a growing deficit. No new taxes would be included to close the budget gap, they said. Read More.