Sunny, with a chance of showers ...
That’s how the economic forecast for the Wilmington region was described Thursday morning at the annual Outlook Conference held at University of North Carolina Wilmington. The sun should shine brighter than the rest of the country, however, and those rain showers shouldn’t be as severe. Adam Jones, associate professor of economics and regional economist with the UNCW Cameron School of Business, and Thomas Simpson, executive in residence of economics in the Cameron School of Business, announced the forecasts in front of an audience of business leaders on a campus that had been all but evacuated in advance of Hurricane Matthew.
“Our region will outperform the national economy,” Jones said. “And it will outperform the rest of the state.” Jones explained that the growing labor force will continue to strengthen the region. “The elevated levels of job openings and increasing consumer spending in the southeast North Carolina region should be strong enough to continue to bring the region’s unemployment rate below the national rate,” Jones wrote in the forecast.
In addition, the forecast states, following a substantial decline over 2005-09, the region’s residential real estate sector has stabilized and once again appears to be on firm ground. Home prices are again near their pre-boom trend, and the ratio of price to income is again in line with historical norms. The forecast mirrored PNC’s economic forecast released Wednesday, which also pointed to stronger economic growth in the area through 2017. The PNC forecast pointed at about 2.5 percent growth in late 2016, leading into 2017, and growth of between 2 and 2.5 percent for the next 12 to 18 months.
The UNCW forecast was slightly more optimistic, as it had the Wilmington Metropolitan Statistical Area (MSA) set to grow 3 percent during 2017, outperforming a national economy that is forecasted to grow at 2.1 percent.
Jones also reported that growth will be buoyed by increased capacity at the airport and a growth trend in business and professional services employment. Jones stated in his forecast that growth is important as a critical mass of businesses is required to sustain the business support infrastructure required to provide good opportunities for the population increases projected over the coming decades. "Infrastructure to support growth has improved over the past year with the widening of the port’s turning basin and expanded capacity at ILM. If you haven’t noticed, planes out of ILM have increased in size, but the number of flights has remained. This has increased capacity and maintained choice. Passenger traffic increased in 2015 reversing a small but steady decline," Jones explained.
The national forecast isn’t quite as sunny. Simpson reported that that while growth in this expansion has been slow in comparison to previous expansions, it is not completely unexpected as slow productivity growth and changing demographics are dampening growth in potential output. Simpson said that consumption will continue to be a workhorse of the economy, and the drag from low levels of business fixed investment should lessen over the coming year providing a lift to growth at the national level.The economist added that the “new normal” is slower growth and lower interest rates. A revival in business investment is needed to break out of low productivity growth, he said, and the Fed is trapped between the need to raise rates to curb inflated asset prices and concerns about low inflation becoming entrenched. He also pointed at the uncertainty around local and national elections as being a big unknown.
Closer to home, the chance of showers comes from a few factors. Jones said the national election, HB2 and the amending of New Hanover County’s special use permit all have the potential to cause some storms in 2017. "Being an election year there is considerable uncertainty with policy going forward from the national election and whether Congress and the White House will work together to reform some festering economic policy concerns," Jones said.
Overall, however, both economists were optimistic about 2017 for the nation and southeastern North Carolina.