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THE ECONOMY IN 2015: LIFT-OFF?
Dr. Mike Walden
Reynolds Distinguished Professor
North Carolina State University
THE NATIONAL ECONOMY
GDP and Employment: back to pre-recessionary levels
Growth rates have accelerated
Confidence up
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REASONS FOR IMPROVEMENT
Rebound from initial slow growth
Housing improvement
Wealth upswing
Continued FED stimulus
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AND, THE PLUNGE IN GAS PRICES
Down 50% since summer
Like a $225 billion tax cut
Doubling of US oil supply in six years
Slowing of usage growth in Asia
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THE FUTURE OF GAS PRICES
Saudis have not cut their supply
Expect US supply to be curtailed
Some rebound in price in 2015
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THE HOUSING MARKET IN 2015
IMPROVEMENT HAS SLOWED
PRE-RECESSIONARY LEVELS NOT FORESEEN
WILL THE MILLENNIALS BUY?
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INFLATION AND INTEREST RATES
INFLATION IS STILL TAME (IS IT TOO LOW?)
SURPRISE: DROP IN LONG-RATES IN 2015
PERMANENT LOW?
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RISING INTERNATIONAL VALUE OF THE $
WILL INCREASE
THE PRICE OF
U.S. EXPORTS
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POLICY IN 2015: ALL EYES ON THE FEDERAL RESERVE
MORTGAGE BUYING HAS STOPPED
RAISING SHORT-TERM INTEREST RATES IS NEXT
WHEN?
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NATIONAL OUTLOOK3% GDP GROWTH
3 MILLION PAYROLL JOBS
5.0% TO 5.5% HEADLINE JOBLESS RATE
INFLATION AND INTEREST RATES STILL LOW
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NATIONAL ECONOMIC ISSUESMissing middle income jobs
Slow wage and salary gains
Technological unemployment
Rising dependency rate
Federal fiscal balance
Infrastructure improvement
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WHAT COULD GO WRONG?EXPANDED UKRANIAN CONFLICT
CHINESE REAL ESTATE IMPLOSION
MIDDLE EAST: IRAN; TERRORIST ATTACK IN SAUDI ARABIA
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NORTH CAROLINA ECONOMY
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NC PAYROLL JOB GROWTH
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2010 2011 2012 2013 20140
20000
40000
60000
80000
100000
120000
ALTERNATIVE MEASURES OF THE NORTH CAROLINA UNEMPLOYMENT RATE 2007: HEADLINE, 4.5%; U5, 5.6%; U6, 8.5%
4,09-3,10
2,10-1,11
3,10-2,11
4,10-3,11
2,11-1,12
3,11-2,12
4,11-3,12
2,12-1,13
3,12-2,13
2,13-1/14
3,13-2,14
4,13-3,14
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7
9
11
13
15
17
headline U5 U6
%
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MIDDLE-INCOME JOBS HAVE BEEN THE SLOWEST GROWING DURING THE RECOVERY
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Leisure/Hosp.
Other Serv.
Trd/Tranp/Util
Educ/Hlth Care
Construction
Gov't
Manufacturing
Prof/Bus Serv
Information
Financial Serv
-10 -5 0 5 10 15 20 25
USNC
%
GEOGRAPHIC ECONOMIC INEQUALITY ALSO CONTINUES IN NORTH CAROLINA
Raleigh/Cary 15.8% Charlotte 14.1%
Asheville 10.4% North Carolina 9.5% Durham-CH 8.6% Wilmington 8.2% Burlington 7.9% Greenville 6.3% Greensboro-HP 5.7% Winston-Salem 5.4% Jacksonsville 4.6% Hickory 3.2% Goldsboro 2.1% Fayetteville 0.6%
Rocky Mount -2.0%
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NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC INDICATORS
Source: calculations by Dr. Michael Walden
NORTH CAROLINA OUTLOOK
CONTINUED GROWTH
125,000 PAYROLL JOBS
5.0% TO 5.5% HEADLINE JOBLESS RATE
AUTO ASSEMBLY PLANT?
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IN SUMMARY
2015 WILL BE A “GOOD YEAR”
MORE HOUSEHOLDS AND BUSINESSES WILL “GET AHEAD”
CHALLENGES RELATED TO GROWTH RATHER THAN DECLINE!
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