The state’s economy will continue its sluggish recovery through 2012, and despite some improvement in the job market, hiring is likely to remain tight, UNC Charlotte economist John Connaughton forecasts.
The Charlotte Observer reports Connaughton expects North Carolina’s economy to grow just 1.7 percent this year over the 2010 level, which is lower than his predictions earlier this year. “That’s slower than the 2.6 percent growth rate in 2010.” he said. The economist made his observations in his quarterly Babson/Capital UNC Charlotte economic forecast.
The economic weakening in North Carolina and across the country this year is due in part to the still-struggling construction sector and hesitant consumer spending, Connaughton said. “The most likely outcome is that the continued sluggishness in both the U.S. and North Carolina economies will last for several years,” he said. “It will take some time for a rebound in the residential construction industry and at least that long for U.S. households to reach their desired level of debt.”
Connaughton expects companies in the state to gain 23,600 net jobs this year. That’s better than the 5,600 net jobs North Carolina companies added in 2010, but it does little to make up for the more than 320,000 jobs lost in 2008 and 2009. The state unemployment rate – 10.1 percent in July, the latest government data show – will probably end this year around 10.3 percent, Connaughton said. The Charlotte region’s unemployment rate is above the state average, 11.2 percent in July.
Eight of the state’s 11 economic sectors are forecast to experience output increases in 2011, with the strongest growth coming from finance, insurance and real estate – which took a hit in the Charlotte area and beyond during the recession – wholesale trade and nondurable goods manufacturing. Construction and mining are among the fields expected to experience declines this year, Connaughton said. Five of the state’s 10 nonagricultural sectors are expected to add jobs this year. Wholesale trade will probably post the biggest gain, 5 percent, followed by retail trade, services and finance, insurance and real estate, Connaughton said.
The outlook for next year isn’t much better: Connaughton expects the economy to grow 1.9 percent in 2012. He expects nine sectors to experience output increases, with big gains coming from retail trade, wholesale trade and services. Construction, which was pummeled during the recession, is expected to grow next year. Connaughton predicts that North Carolina companies will add 28,600 net jobs. The unemployment rate will probably remain inflated through 2012, ending the year at 10.3 percent, he said. Read more.