Pittsboro, NC – N.C. State University economist Michael Walden moderated a “Chatham Development Briefing” on Wednesday at the Chatham County Agricultural Center before a crowd of about 300 people. The event is an annual production of the Chatham County Chamber of Commerce. In his opening statements Dr. Walker noted that “if we continue the pace of job growth for the rest of the year that we had in the first half of the year in North Carolina, we’re going to have the fastest job growth in our state than we’ve had in 25 years.”
Dr. Walden presented an overall positive picture of North Carolina’s economic climate with opportunities for success for many different segments of the population.
Below is the transcript of his opening remarks.
Dr. Michael Walden: Thank you very much, Debbie. I am going to be your economic navigator as well as master of ceremonies when we assemble the panel. I have to say, I’m getting over some kind of stuff that’s been going around, so I may have to cough occasionally. If it gets too bad, I’m fortunate enough to have my wife, Mary, here. Mary will take over then.
Now, her economic outlook will probably be different than mine. She’s a fine arts person, a decorator, designer. Don’t know what Mary will say, but it will be good.
I just have to say, the economy has been on a very great roll. If we look at national numbers, you’ve heard this number banded around four percent GDP growth. That’s very good. Looks like it might be faster in the third quarter. We have unemployment rates that are record lows for many segments of the population. Business optimism is high, consumer optimism is high.
I read recently that the job market is getting so tight that many employers are actually lowering their standards and hiring, for example, people they would have never looked at in years past because they just need people there and they’re willing to train them. I think that’s an excellent, excellent sign.
Just to fall into the statistic, in the last year, the unemployment rate along high school dropouts has fallen 10 times faster than the unemployment rate among college graduates. So we are in a booming economy. Now, there are issues out there. I think everyone is aware and certainly farmers in North Carolina are aware of the trade disputes. We had some good news yesterday about probably a resolution with those with Mexico.
I think Canada will get on board. So maybe we’ll see some resolution of these trade disputes by the end of the year and hopefully those trade deals will be even better for the country. Those of your in the real estate industry, those of you in any development where financing is important, you know that interest rates have been trending upward. Historically, though, interest rates are still very very low.
Inflation is still very very low. But it looks like we are on an upward trend for both of those. The Federal Reserve appears to be on path to possible raise their key short-term interest rate by a quarter percent, twice more this year. As you have known, the President is not happy with this, so we have somewhat of a Twitter… well, a one-sided Twitter war. The Federal Reserve is not going to respond. They’re stogy bankers, they’re not gonna get into that.
But that is something to watch. And just a little tiny background on this so you get some perspective, the Federal Reserve actually has a very difficult job. Unlike other central banks in the world who have one objective, keep inflation low, that’s all they have to do, our Federal Reserve has been told by the Congress in their charter, to keep inflation low but also keep unemployment low. That’s very, very hard to achieve that dual mandate. And usually, what the Federal Reserve has to do is focus on one and hope the other will still be good. And as you might expect, since the Great Recession, when the economy was growing very slowly, the Federal Reserve’s focus was on getting unemployment down.
So they cut the interest rates very, very low, their key short-term interest rate was kept at zero percent. Federal Funds rate for I think six years, unprecedented. It’s actually free money there. However, as the economy has begun to improve the last two, two and a half years, unemployment rates have gone down, job numbers have gone up, and we’re beginning to see a little bubbling up of the inflation rate. Inflation now on an annual basis is closer to 3%.
It was running around 2% just last year. And prior to that, it was around 0-1%, so the inflation rate has bubbled up. And the Federal Reserve has shifted its focus, slightly, to now worrying about inflation. And the way that they try to handle inflation is to keep the economy growing but make sure it doesn’t grow so fast that the lid comes off the pot.
So that’s a very, very difficult job for them to do, but it looks like they are now in that trend of slight increases in interest rates.
Now, turning my focus closer to home, North Carolina numbers, state numbers, all look great. I just put out my biannual economic outlook for the state. You can go on my website at NC State to get a free copy of that.
One of the things I’ve noticed is if we continue the pace of job growth for the rest of the year that we had in the first half of the year in North Carolina, we’re going to have the fastest job growth in our state than we’ve had in 25 years. And very importantly, you hear this term, “The Economic Divide.” The rural/urban economic divide. In the first six months of this year, the second fastest job growth rate in the state was in rural counties.
Fastest was actually in this area, the Durham/Chapel Hill Metro area. Charlotte actually can 2/3 of the way down, it was 2/3 of the way down the list. And we’re also beginning to see middle income jobs, particularly in manufacturing, construction, transportation, come back. So a lot of good things happen when the economy is growing and we’re seeing those in North Carolina.
And then, lastly, the focus right here, Chatham County, the greater triangle region, and what can you say? When I talked to people that I associate with around the country, usually academics, but some in the business world, they just marvel at this region. They wanna know, what’s our secret? Why are we so attractive? Why does every business want to be here?
And I think, fundamentally, it started with our institutions of high education. Our great universities, our great colleges, our great community colleges. We are well-known in North Carolina for having great community colleges. Cause, fundamentally, businesses need people, good workers. So that’s really where it’s going to start. But also, we have an excellent reputation in terms of a business climate. We have a very reasonable tax system. We have wonderful climate and a diversity of climate. We’re here in the South, South-East part of the country. It’s been the fastest growing, so we are accessible to that.
And so, I think North Carolina is going to continue to grow. And in fact, as Debbie mentioned, my latest book is called “North Carolina Beyond the Connected Age: The Tar Heel State in 2050.” Incidentally, if you have not gotten your labor day gifts… you are supposed to be labor day gifts. My book would be an excellent gift.
Also, if you have an anniversary coming up with your special someone, if you get the hard copy version of my book and wrap it in a nice paper, it’s got some heft to it so you give it to your special partner, and he or she opens it expecting something really nice, and then of course they realize what it was, they will have a look on their face that I want you to take a snapshot of and send me. I’m actually flatter. Maybe I’ll get another book out of that.
But I’m projecting North Carolina will employ three million more people between now and the mid-century. The biggest, fastest growing part of our population, just like in the nation, is going to be my generation, 65 and older. So that’ll present some challenges.
I think this region … I’m gonna talk now about the greater triangle region, demographers, for example, who this is not Walden’s projection, but demographers who work for the state, work with the state general assembly on projections, predict that this region, the triangle region will almost double in population between the 2010 census and the 2050 census.
So, I think growth, of course, does present challenges, but I think we’d rather have growth than have no growth, and I think that is definitely going to be here.
So, with that, Cindy has given me a very aggressive schedule. So, Cindy, are we now at the time to bring the panelists up?
Cindy: Yes.
Okay. Do they know who they are and can come up?
And what is going to happen, ladies and gentlemen, next, is I will give brief introductions to the panelists, including a secret question that they don’t know about. That’ll make you nervous. And then we’re going to engage for about 20 minutes with me asking some questions important for Chatham County, the region, and they’re answering, and then we get some more fun things along the way. And I have not met all of our panelists so …