CHARLOTTE, N.C. – Sept. 15, 2010 – The North Carolina economy is expected to increase by 0.8 percent over the 2009 level, UNC Charlotte economist John Connaughton announced today in his quarterly report on the health of the state economy. This modest increase follows a decline of 2.7 percent in 2009.
Connaughton reports that the North Carolina economy experienced a modest increase in Gross State Product (GSP), an annualized real growth rate of 0.2 percent, during the first quarter of 2010. During the second quarter, Connaughton expects GSP to increase by an annualized real rate of 4.2 percent. Growth is expected to slow in the second half of the year, with an increase of 2.6 percent forecast in the third quarter. Fourth quarter GSP is forecast to increase by an annualized rate of 3.2 percent.
“The first quarter GSP performance was considerably weaker than the U.S. GDP increase of 3.7 percent,” Connaughton noted. “The national economy has been able to put together four consecutive quarters of expansion, while the North Carolina economy has struggled to put two quarters of growth together.
“The state’s economic growth during this time has only been sufficient to stem job losses, but not enough to generate job growth,” Connaughton continued. “Although there is little likelihood of a ‘double dip’ during the second half of the year, the economy will continue to be sluggish enough that to many people it will feel like a return to recession.”
Connaughton is a professor of economics in the Belk College of Business. He has served as director of the UNC Charlotte Economic Forecast since 1981.
2010 Sector Analysis
Seven of the state’s eleven economic sectors are expected to experience increases during 2010. The sectors with the expected strongest increases are:
• Agriculture, with a real increase of 7.7 percent;
• Services, with a real increase of 4.1 percent;
• Mining, with a real increase of 3.4 percent;
• Government, with a real increase of 3.1 percent;
• Retail Trade, with a real increase of 1.9 percent; and
• Transportation, Warehousing, Utilities and Information (TWUI) with a real increase of 1.5 percent.
One other sector, Wholesale Trade, is also expected to grow, but with an increase of 0.6 percent will fall below the overall GSP growth of 0.8 percent. Two sectors, Durable and Nondurable Goods Manufacturing, will experience declines while Finance, Insurance & Real Estate (FIRE) will be essentially flat.
2010 Jobs Outlook
For 2010, North Carolina establishments are expected to gain 37,400 net jobs, an increase of 1.0 percent over the 2009 level. The 2010 job gains follow the loss of over 282,000 jobs in the state during the 2008-2009 recession.
The North Carolina seasonally-adjusted unemployment rate began 2010 at 11.1 percent, over 1.5 percentage points higher than the United States rate. By July, the North Carolina rate had dropped to 9.8 percent, while the United States rate had fallen to 9.5 percent. Both the U.S. and North Carolina unemployment rates are expected to continue to decline slightly during the year, and by December the North Carolina unemployment rate is expected to decrease to 9.4 percent.
2011 Forecast
For 2011, Connaughton forecasts that the state GSP will increase by 2.7 percent over the 2010 level.
First quarter GSP is expected to increase by an annualized real rate of 2.6 percent. During the second quarter, GSP should again increase, by an annualized real rate of 2.2 percent. In the third quarter, GSP growth is expected to remain stable and record an annualized real growth rate of 2.2 percent. In the fourth quarter of 2011, GSP is expected to grow at an annualized real rate of 2.4 percent.
Only seven of the state’s eleven economic sectors are forecast to experience output increases during 2011. The sectors with the strongest expected growth are:
• Finance, Insurance and Real Estate (FIRE) with a projected real increase of 5.5 percent; • Services with a projected real increase of 4.8 percent;
• Government with a projected real increase of 3.9 percent;
• Retail Trade with a projected real increase of 3.0 percent.
Two other sectors are also expected to experience output growth, but at rates less than the overall state level: Transportation, Warehousing, Utilities and Information (TWUI) with a projected real increase of 2.4 percent; and Mining with a projected real increase of 0.2 percent.
2011 Employment Outlook
For 2011 North Carolina establishments are expected to gain 19,700 net jobs, an increase of 0.5 percent over the employment level in Dec. 2010.
Seven of the state's ten nonagricultural sectors of the economy are expected to experience employment increases during 2011. The sectors with the strongest employment increases in 2011 are projected to be Wholesale Trade at 5.5 percent, Retail Trade at 2.5 percent and Services at 1.8 percent.
“While the recovery in GSP is underway, job growth is likely to lag in North Carolina,” Connaughton said. “We lost over 282,000 jobs during 2008 and 2009, and it is likely to take four or five years to regain the lost jobs. Job growth will be the biggest problem for both the U.S. and North Carolina economies over the next several years.”
The UNC Charlotte Economic Forecast is published quarterly by the Belk College of Business. The full Forecast report is available at forecast.
Connaughton will release his next Forecast report in Dec. 2010.
About the Belk College of Business
Accredited by AACSB International, the Belk College of Business at UNC Charlotte offers outstanding business education programs at the undergraduate, graduate and doctoral levels. The Belk College is committed to building strong partnerships in the Greater Charlotte region and beyond as a vital part of its vision to be a leader in 21st century business research and education. www.belkcollege.charlotte.edu or www.facebook.com/BelkCollegeOfBusiness.
Belk College of Business contact: Sasha Trosch, 704‑687‑7601, sasha.trosch@uncc.edu.
Public Relations media contact: Buffie Stephens, 704‑687‑5830, BuffieStephens@uncc.edu.