10 Jan Growth in 2014 will be similar to last year’s, economists say
A Federal Reserve economist on Thursday took a page from Hollywood to describe the economy.
“When I woke up this morning and reviewed my notes,” said Federal Reserve economist Richard Kaglic, “I couldn’t help but feel like Bill Murray’s character in ‘Groundhog Day.’
“When you look at the economic environment it doesn’t feel a whole lot different than it did” last year, he said as he addressed the annual McGladrey economic forecast at the Wilmington Convention Center.
He saw national economic growth coming in between 2 and 3 percent in 2014.
Growth in Southeastern North Carolina is pretty much following the same script.
Last year’s 2.5 percent growth in local gross domestic product will just about repeat itself in 2014, said William “Woody” Hall, an economist at the University of North Carolina Wilmington, who followed Kaglic on the program.
Strong performance by the retail and tourism sectors helped lead the Wilmington area’s growth in 2013, with even construction-related industries starting a recovery, Hall said in an interview before Thursday’s forecast.
In fact, retail trade and tourism now have recovered more than they lost in dollar amount during the recession, he said, adding that he saw no end to the increase in jobs in those fields.
Current growth may not be strong enough, though, to support a significant increase in employment overall.
Employment is going to grow but just not nearly as fast as it did after the previous recession in 2001, Hall said.
More than four years out from the end of the last recession in mid-2009, employment is up about 5 percent, he said, but at the same point following the 2001 downturn it was up 27 percent.
There has been a net creation of jobs over the last year, “but it’s going to take a while to get back to where we were,” Hall said. “Unemployment rates are still double what they were in 2007.”
Construction employment is rising, but isn’t nearly back to where it was before the recession. Sectors related to construction, such as sales, leasing and mortgage and legal services are seeing some employment increases, he said in advance of the outlook gathering.
“They are in a recovery mode,” he said.
In an interview, Hall also forecast:
Strong job growth continuing in the health sector, which never was hit as hard as other industries in the recession.
A recovery in container traffic at the Port of Wilmington in both imports and exports. “It hasn’t recovered everything it lost, but is coming back strong,” Hall said.
Air passenger traffic stabilizing.
Housing prices stabilizing, with home sales double what they were three years ago.
Retail sales have completely recovered from the recession, though the growth rate has declined, Hall said Thursday.
Tourism’s recovery can be seen in room-tax collections, which also are back to pre-recession levels, he added.
Kaglic, of the Fed’s Charlotte office, said there are reasons to be optimistic about the economy — Equity markets are up, home prices are higher and consumer and business confidence is up somewhat.
He saw national economic growth of between 2 percent and 3 percent in 2014, much like 2013.
“Some analysts are upping the forecast for 2014, but I also see a lot of reason for caution,” Kaglic said.
“We still don’t have an answer for our long-term fiscal imbalances,” he said, referring to the ongoing budget and tax battles in Congress. “It creates a lot of uncertainty and a drag on growth.
“Personal incomes aren’t growing very robustly,” he said. And if they aren’t growing it’s going to be hard to keep consumers spending, Kaglic added.
“Until I see some movement in wages and personal income growth, I cannot be confident that consumer spending is going to rise much better than 2 to 2 1/2 percent.
“If 70 percent of your economy is growing at 2 to 2 1/2 percent, where does the growth come from?”
Turning to North Carolina, Kaglic said there had been broad-based growth among business sectors but the growth was not uniform throughout the state.
Most of it is occurring in areas like Charlotte, the Triangle and Asheville, while old manufacturing and rural areas lag.
Wayne Faulkner: 343-2329
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