Modest Economic Growth Continues to Hamper Job Creation, Economists Say
First the good news: Economic growth in Greater Wilmington is moving ahead faster than North Carolina and the U.S. as a whole, with activity in retail and hospitality now reaching pre-recessionary levels. But problems persist, according to economist Woody Hall of UNC Wilmington’s Swain Center for Business and Economic Services. “We’re looking at just over a two percent growth rate in 2011,” Dr. Hall told the October 11th gathering of the University’s annual Economic Outlook Conference. “And we’re expecting something slightly less than that in 2012.”
A recent analysis by the Swain Center found reasons to be encouraged by short-term economic prospects in the Wilmington MSA. There was a “positive” outlook for jobs in allied health, professional and technical services, and finance and insurance, Dr. Hall reported. Jobs in manufacturing, construction and administration were given a “neutral” outlook, he said. Greater Wilmington returned to positive economic growth in 2010 – slightly above two percent – compared to the one percent contraction suffered in 2009. Continued weakness in real estate makes it unlikely the region will return anytime soon to the kind of feverish growth seen between 2003 and 2007, when annual GDP increases ranged from 4.5 percent to nearly 8 percent.
Nationally, shaky consumer confidence and modest bank lending continue to keep the private sector leery of making large capital investments or engaging in vigorous hiring, said Dr. Thomas Simpson, executive in residence at UNCW’s Cameron School of Business. “Businesses are quite cautious,” Dr. Simpson said. With U.S. housing starts occurring at a mere 25 percent of their peak levels, it would likely be several years before construction could return to its position as a leading economic driver. But corporate balance sheets are strong, he said, putting firms in a good position to invest in expansions once confidence is restored. “Large businesses are sitting on a mountain of cash,” Dr. Simpson said. His forecast calls for national economic growth to increase to 2.5 percent, helped along by inventory replacement and “pent-up demand.”