ECONOMIC OUTLOOK: IS GROWTH BACK? Dr. Michael Walden Reynolds Distinguished Professor North Carolina State University 1.

ECONOMIC OUTLOOK: IS GROWTH BACK?

Dr. Michael WaldenReynolds Distinguished ProfessorNorth Carolina State University

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Nation’s Economic Report Card: Real GDP (annualized % change in real GDP)

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MEANING OF “END TO THE RECESSION”

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Job Growth Has Turned Positive

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BUT THE JOB RECOVERY WILL BE SLOW (NONFARM EMP AND UNEMP RATE)

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CONSUMER WEALTH AND INCOME HAVE REBOUNDED (billions of 2005 $)

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CONSUMER FINANCIAL BEHAVIOR HAS DRAMATICALLY CHANGED (INDICES)

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BUT CONSUMER SPENDING AT RETAIL STORES IS INCREASING (billions of 2005 $, seasonally-adjusted, excl. vehicles & parts)

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CORPORATE PROFITABILITY HAS ALSO IMPROVED (PRE-TAX, % OF GDP)

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HOUSING MARKET HAS NOT IMPROVED CONSISTENTLY

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HAVE HOUSING PRICES STOPPED FALLING?

(ANNUALIZED % CHANGE)

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INFLATION IS CURRENTLY NOT A PROBLEM (CPI, total and core)

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ARE INTEREST RATES POISED TO RISE? (YIELDS ON TRESURY SECURITIES)

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GOVERNMENT POLICY

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The Fed’s Monetary Policy

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FISCAL POLICY – RISING DEBT

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Social Security, Medicare, and Medicaid are Driving Federal Spending

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NORTH CAROLINA ECONOMIY

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NC JOBS HAVE BEGUN TO COME BACK

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N.C. Major Sector Job Changes ( thousands, manuf and prof. serv on left, const and fin. on right)

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160210260310360410460510560610

420440460480500520540

Manuf Prof Serv. Const Hlth/Edu

Unemployment Rate Forecasts

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8

8.5

9

9.5

10

10.5

11

11.5

%US

NC

Goldsboro Metro Job Market Trends (Index, December 2007 = 100, seas. adj.)

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0.870.890.910.930.950.970.991.011.03

Goldsboro and N.C.: May Unemployment Rate (seasonally unadjusted)

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WRAP UP: WHAT’S AHEAD?

No “double dip”, but slow growth

Household debt reduction is the key

Keen competition for growth – NC well positioned

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