Though the reinvigorated economic crisis in Europe has erased last quarter’s gains, neither the U.S. nor North Carolina are headed toward recession, UNC Charlotte professor John Connaughton said in a Charlotte Observer news article.
Connaughton made the case that both the state and national economies would continue slow but steady gains while avoiding dramatic spillover effects from an increasingly likely Greek exit from the eurozone. He projected about 2 percent growth in the state’s economy for the next two years. “We’re not talking recession,” he said. “We’re really talking sluggish growth.”
Last quarter, the national economic data were looking up. The labor market was gaining more than 250,000 jobs per month and the stock market rallied. Three months later, the Dow Jones Industrial Average has given up all the gains it had made in 2012, the U.S. gained only 69,000 jobs in May, Spain’s unemployment stands at 24 percent, and Greece is preparing for elections likely to hasten its exit from the European monetary union. “To quote a line from ‘Jaws 2,’ ‘Just when you thought it was safe to go back in the water …,’ ” Connaughton said. The good news, though, is that U.S. banks aren’t terribly exposed to the European financial crisis, Connaughton said.
A bigger question, he said, is where job growth will come. For the summer, at least, national job numbers are likely to remain stagnant and could turn negative for a month or two, Connaughton said.
But a number of indicators point toward increasing growth by the end of the year. Gas prices are falling, which would boost consumer spending. Worker productivity is flat, meaning businesses will have to hire to boost output. Households are beginning to go into debt after an extended period of deleveraging. And consumer prices are stable, enabling the Federal Reserve to continue historically low interest rates and encouraging home purchases amid rising rents.
Bottom line, Connaughton said he feels it’s a “fairly upbeat” forecast. He projects the state to gain a net 63,500 jobs in 2012, and 71,400 in 2013.
North Carolina lost about 330,000 jobs during the downturn, and has gained about 110,000 of them back so far. It still lags behind the national economy, which has gained back more than 40 percent of the 8.7 million jobs lost. Read More.