UNC Charlotte economist John Connaughton expects the North Carolina economy to continue expanding in 2008, but cautions that rising energy prices, the sub-prime credit crisis and falling consumer confidence may impact the state’s seven-year economic expansion.
In Connaughton’s latest quarterly snapshot of the state economy, he expects the state’s economy to show growth over 2006 (the last full year for which data is available), but at rates less robust than years past.
“Rising energy prices and the sub-prime related credit crunch have consumers on the rocks,” Connaughton commented. “Consumer spending represents 70 percent of U.S. Gross Domestic Product (GDP); so if consumers are nervous, the economy is in trouble. Since July of 2007, consumer confidence has fallen dramatically. The February number was 75.0. Many economists believe this is the recipe for a recession. However, it is still too early to call.”
Connaughton expects the services, retail trade and wholesale trade sectors to show the strongest growth in 2008 but forecasts declines in durable goods manufacturing, nondurable goods manufacturing, and construction.
The full UNC Charlotte Carolina Economic Forecast report is available at www.belkcollege.charlotte.edu/forecast.