North Carolina’s economy is expected to continue its sixth year of economic expansion in 2007, UNC Charlotte economist John Connaughton reportedtoday in his TIAA-CREF/UNC Charlotte Economic Forecast for the state.
Connaughton estimates that real, inflation-adjusted Gross State Product (GSP) is expected to increase by 1.5 percent over the 2006 level.
“Since World War II there have been 10 periods of economic expansion with an average length of 57 months,” Connaughton said. “By March 2007 we will have been in the current expansion for 65 months. Projecting out for the whole year, the expansion would cover 74 months, making it the fourth longest expansion since 1945.
“With the recent fall in energy prices, it is very likely that GSP growth will continue during 2007 and produce the sixth year of this expansion,” he added.
The forecast, funded by TIAA-CREF and published quarterly by the University of North Carolina at Charlotte, provides both a review of North Carolina’s recent economic performance and a barometer of the state’s future growth. Connaughton, who directs the forecast, is the TIAA-CREF professor of economics at UNC Charlotte’s Belk College of Business.
Connaughton predicts that overall growth during the four quarters of 2007 is expected to be quite stable. For 2007, first quarter GSP is expected to increase by an annualized real growth rate of 1.4 percent.
During the second quarter, GSP is expected to increase by an annualized real rate of 1.6 percent. In the third quarter, GSP growth should continue and record an annualized real growth rate of 1.4 percent. In the fourth quarter of 2007, GSP growth is expected to reach an annualized real rate of 1.6 percent, he said.
Eight of the state’s eleven economic sectors are forecast to experience growth during 2007. The sectors with the strongest expected growth forecasts are:
- mining with a projected real growth rate of 4.1 percent;
- wholesale trade, 3.7 percent;
- transportation, warehousing, utilities, and information (TWUI), 3.7 percent;
- finance, insurance, and real estate (FIRE), 2.8 percent;
- agriculture, 2.8 percent;
- services, 1.8 percent;
- construction, 1.8 percent; and
- government, 1.6 percent.
One sector, retail trade, is not expected to grow during 2007. The durable goods manufacturing sector is expected to decline by 1.3 percent, and the nondurable goods manufacturing sector is expected to decline by 0.7 percent.
For 2007, North Carolina employers are forecast to add 60,800 net jobs, an increase of 1.5 percent over the 2006 level. Seven of the state's 10 nonagricultural sectors of the economy are expected to experience positive employment growth during 2007. The sectors that are expected to display the strongest employment growth rates in 2007 are construction at 3.9 percent, government at 3.2 percent, and FIRE at 2.6 percent.
The unemployment rate for December of 2006 was 4.9 percent, above the national rate of 4.5 percent. The North Carolina rate is expected to be stable during 2007 and is forecast to close the year at 4.9 percent.
Although final economic data for last year is still being reported, Connaughton expects the North Carolina economy to have grown by 2.5 percent during 2006. The growth forecast for 2006 is lower than the growth rate of 4.4 percent experienced during 2005.
During the first quarter GSP increased by an annualized real growth rate of 5.7 percent. During the second quarter, GSP growth slowed considerably, recording annualized real growth rate of 0.4 percent. In the third quarter, growth picked-up as real annualized GSP increased by 2.3 percent. In the fourth quarter, North Carolina GSP is expected to slow to annualized real growth rate of 1.6 percent.
“Despite the weakness during the last three quarters, the forecast for 2006 represents the fifth consecutive year of economic expansion,” Connaughton said. “This economic expansion is likely to continue into 2007 as a result of the decline in energy prices that began in September of 2006.”
Connaughton forecasts that nine of the state’s eleven economic sectors are forecast will have experienced growth during 2006. The sectors with the strongest expected growth forecasts are:
- mining with a projected real growth rate of 9.6 percent;
- construction, 8.5 percent;
- wholesale trade, 5.6 percent;
- services, 4.4 percent; and
- finance, insurance, and real estate (FIRE), 2.7 percent.
Four other sectors are expected to experience growth during 2006 but at rates less than the overall state growth rate of 2.5 percent. These sectors are transportation, warehousing, utilities, and information (TWUI) with a projected real growth rate of 2.2 percent; government, 1.2 percent; retail trade, 0.3 percent; and durable goods manufacturing, 0.2 percent.
For 2006, the North Carolina economy added 57,500 net jobs by December 2006, an increase of 1.4 percent over the employment level in December 2005. Six of the state's 10 nonagricultural sectors of the economy experienced positive employment growth during 2006.
The sectors that displayed the strongest employment growth rates in 2006 were construction at 4.1 percent, FIRE at 3.6 percent, and services at 2.7 percent.
The comprehensive TIAA-CREF/UNC Charlotte Economic Forecast for December 2006 is available at www.belkcollege.charlotte.edu/forecast . The next forecast report will be released in June 2007.
About TIAA-CREF:
TIAA-CREF is a national financial services organization with more than $380 billion in combined assets under management and the leading provider of retirement services in the academic, research, medical and cultural fields. www.tiaa-cref.org
About the Belk College of Business
Accredited by AACSB International, the Belk College of Business at UNC Charlotte prepares students and professionals for management careers in a variety of industries. The Belk College delivers top-quality programs in disciplines including business administration, sports marketing and management, mathematical finance, accounting and economics. The College currently enrolls 2,500 undergraduate and 500 graduate students, making it one of the largest business programs in the Carolinas. www.belkcollege.charlotte.edu
About UNC Charlotte
A doctoral/research intensive university, UNC Charlotte celebrated its 60th anniversary in September 2006. It is the fourth-largest of the 17-constituent University of North Carolina system and the largest institution of higher education in the Charlotte region. The university comprises seven professional colleges and currently offers 18 doctoral programs, 59 master’s degree programs and 85 programs leading to bachelor’s degrees. Enrollment exceeds 21,500 students, including more than 4,400 graduate students.