Analysis Roundup: November 2, 2012

Wells Fargo Economics Group
NC Outlook shows “downshift”

Thursday evening, Wells Fargo Economics Group released their latest North Carolina Outlook. Their analysis points to how global downturn and uncertainty over the pending Federal “fiscal cliff” put negative pressure on economic activity within the state this year, as well as create potential decline going into 2013.

Metro-specific analysis is also included in the Outlook for Asheville, Charlotte, Raleigh, Greensboro and Winston-Salem.

Click Here for the NCLGBA Post & Access to the Outlook

National Retail Federation/Wells Fargo/NCLGBA
2012 Holiday Spending Growth Predicted

The National Retail Federation is predicting 4.1% annual growth in retail sales during the 2012 holiday season (November-December), while Wells Fargo also forecasts growth at 3.8%. While below last year’s 5.6% growth rate, it is still above the 3.1% rate reflecting the 10-year average.

Click Here for the NCLGBA Post on 2012 Holiday Sales

Bureau of Labor Statistics
National Workforce Gains 171,000 Jobs

Today, the BLS reported a 7.9% seasonally-adjusted national unemployment rate for October 2012, slightly above last month’s 7.8% rate. Nonfarm payroll increased 171,000 in October, with private sector workforce growth of 184,000. Growth in the services sector continued to outpace goods-production (click here for quick overview of sector performance).

Labor force participation remains below 64%. At the October 2011 participate level of 64.1%, unemployment would be 8.3%, with the rate remaining near or above 10% at pre-recession participation levels. Total nonfarm payroll is still more than 4 million jobs less than early 2008, prior to the start of the recession.

Click Here for the BLS Press Release

NC Employment Security/BLS
NC Counties, Metro See September Payroll Gains

95 of 100 North Carolina Counties and all of the State’s Metropolitan Areas saw increases in nonfarm payroll in September. County payroll growth for the month (1.67%) was close to the year-to-year growth rate for September (1.77%), reflecting the ongoing issues North Carolina is having with sustaining increasing in employment.

Metropolitan areas saw average 1-Month job growth of 1.6%, with 12-Month growth clocking in at an average of 2.7%. Rocky Mount, struggling with among the highest unemployment rates for NC Metropolitan Areas, had the strongest 12-Month job growth at 4.4%.

 

Gas Buddy/AAA/WTVD
“Demand Destruction” Helps Bring Gas Prices Down

Among the effects of Superstorm Sandy, North Carolina residents are noticing another significant drop in gas prices. This is due to the fact that while the storm did not disrupt national gasoline refinery or pipeline activity, the devastation and loss of end delivery infrastructure in the Northeast has created temporary “demand destruction” forcing prices to come down in other areas.

For a better explanation, check out this interview with NC State Economist, Dr. Michael Walden, aired Thursday night:

In the past week, the state average for unleaded as dropped 2.5%, and pump prices in many locations today are less than $3.30/gallon.

Since climbing to over $3.80/gallon shortly after Labor Day, the NC state average has dropped nearly 14%. In most metro areas, according to AAA, prices today are at or slightly above one year ago, though the state average is 21% higher than 2 years ago, reflecting considerable increases in gas prices and the impact felt on local budgets.

Training Opportunities

Next Wednesday, November 7th, 1PM ET – Unbalanced Mayhem: Trends, Challenges & Failures in Local Government Budgeting (Webinar Hosted by American Society for Public Administration & Association for Budgeting & Financial Management)

Presented by Kenneth Hunter, City of Rocky Mount, North Carolina

Across the country, local governments are struggling with fiscal pressures created by ongoing economic turmoil and its impact on revenues, expenditures and citizen quality of life. This presentation will examine specific challenges municipalities and counties encounter when developing annual budgets and how they impact local policy decisions with respect to personnel, capital, taxes and other facets of public administration. Click Here for Registration Info.

November 13th-15th – Intermediate Purchasing Seminar (UNC School of Government)

Click Here for More Info & To Register

Friday, November 16th – Positive Problem Solving (UNC School of Government)

Facilitating positive change is the focus of this one-day leadership development workshop for public staff and elected officials who are interested in involving others, building on current assets, and engaging in joint problem-solving.

The course provides an opportunity for significant interaction with instructors and the chance to apply the course content to real-time work scenarios in class.

Click Here for More Info & To Register

Wednesday, November 28th, 1PM ET – Michigan’s Emergency Manager Law:  Fiscal Fix or Loss of Local Democracy? (Webinar Hosted by American Society for Public Administration & Association for Budgeting & Financial Management)

This webinar discusses the Michigan Emergency Law (EM law), passed in 2011. It is considered the most aggressive attempt by a state to modify and reign in local democracy in an attempt to solve a serious fiscal crisis.  Most states take an approach where local officials are required to undertake certain actions in order to benefit from state support.  Other states insert a financial control board which has the power to oversee city operations and potentially veto certain local decisions.  Few states have implemented an approach that completely removes local decision making and local democracy.  The question arises as the justification for such extreme action. Click Here for Registration Info.

Thursday, November 29th – Accounting & Auditing Update (UNC School of Government)

Presented by Greg Allison

This one-day course will focus on new and emerging governmental accounting and financial reporting requirements. Recent pronouncements and exposure drafts of the Governmental Accounting Standards Board (GASB) will be highlighted, as will the GASB’s technical agenda. (8 Hours CPE)

Program Topics:

  • Overview of current GASB projects related to pension accounting
  • Changes to the reporting of certain assets and liabilities
  • Accounting and financial reporting requirements of GASB Statement No. 54 and other recent statements
  • Highlights of the GASB’s new Comprehensive Implementation Guide
  • Common accounting and financial reporting problems

Click Here for More Info & To Register

Links of Interest

Economic Snapshot – Federal Reserve Bank of Richmond (Includes North Carolina, Released Today)

ASPA National Blog – New Skills for Complex Times

Mercatus – Pensions in Peril

Census Bureau – New Findings on Metropolitan and Micropolitan America and Change Between 2000 and 2010

Wells Fargo Economics Group – An Early Look at the Impact of Hurricane Sandy

CREC – Regional Cluster Analysis – North Carolina’s Eastern Region (Industrial Economic Development)

Charlotte Business Journal – Piedmont Natural Gas Rates Bump Up November 1st

Charlotte Business Journal – Simon says only one outlet center will get built (in Charlotte)

Wells Fargo Economics Group – Fed Maintains Weak Growth, Low Inflation Outlook (Upholds justification for continued quantitative easing)

PNC Economic Outlook Survey, Fall 2012

WRAL – Consumer Confidence Continues Improvement

Durham Herald-Sun – Chapel Hill weighs trash options

WTVD – Feds provide funding to repair Outer Banks roads damaged by Sandy

Wells Fargo: NC Economy “downshift”-ing from early year growth

Michael Brown, an Economist with Wells Fargo Economics Group, will present an economic update at the Winter 2012 NCLGBA Conference in Concord

North Carolina’s strong cyclical tie to national economic trends forced conditions within the state to decline over the past couple months of 2012 compared to growth experienced earlier in the year, according to yesterday’s North Carolina Outlook released by Charlotte-based Wells Fargo Economics Group.

North Carolina’s economy began the year with robust employment growth and improving personal income. As the year has progressed, the downshift in the U.S. and global economies along with heightened uncertainty surrounding fiscal policy has slowed job growth and, as a result, economic output. Given the slowdown around the state, it is not surprising that the employment dynamics have changed little compared to this time last year.

The report was drafted by Senior Economic Mark Vitner, along with Economist Michael Brown and Economic Analyst Sarah Watt. Michael Brown will present the Economic Update at the Winter 2012 NCLGBA Conference in Concord, December 5th-7th (Click Here for Registration Info).

Click Here for Wells Fargo’s latest North Carolina Outlook

Year-to-year employment in North Carolina (as of September 2012) is only up 0.7% statewide (0.1% 3-month rolling average), with the State unemployment rate at a relatively-high 9.6% (compared to 7.8% national rate)

Higher-skilled labor markets (Charlotte, Raleigh/Durham) are outperforming the rest of the state in workforce recovery. However, there is some signs of manufacturing growth, as the state saw 5,000 new jobs in the sector so far for 2012, with growth leaning towards durable goods.

Downward pressure on North Carolina’s economy is closely tied to the current global economic slowdown and increased domestic uncertainty resulting from the Federal “fiscal cliff” situation (see this analysis of Mark Vitner’s October Commentary for more insight).

Global slowdown is causing a deceleration in export of goods and services from the state to places abroad, though levels are higher than last year. Exports to China have fallen off 4% compared to last year, and the Eurozone debt crisis led exports to Europe to fall 6% in the first half of 2012. Growth in exports to Canada and Mexico helped offset these declines.

Recovery and growth in the durable goods sector also posses some risks:

…the move toward more manufacturing jobs being concentrated in durable goods production has made the state’s manufacturing base more susceptible to a cyclical downturn, which is somewhat troubling as we expect domestic growth to slow in 2013 and for global growth to remain tepid for the next few years. Not only is the durable goods sector more cyclical, but it is also more susceptible to exogenous events, such as shifts in tax policy, geopolitical events and swings in exchange rates.

The outlook draws attention to concerns regarding the “Fiscal Cliff” and its impact within North Carolina, given the strong presence of the military within the state, potential tax policy implications and more:

The impact on the North Carolina economy could be quite severe if all of the scheduled federal spending reductions and tax increases are allowed to go into effect. We do not believe this is the baseline case, rather there will likely be a compromise of some tax increases and more modest spending reductions. Nonetheless, even under this baseline case there will be negative effects on North Carolina, specifically relating to personal income and employment growth.

Impact of an economic slowdown and Federal policy uncertainty could put further pressure on limited personal income growth. While we saw 4% growth for the second quarter 2012, consumer spending could be curtailed following the holiday season into the start of 2013.

With respect to government’s role in North Carolina’s economy, it accounts for 25% of total personal compensation.

The bulk of government income is tied to state and local employees, including school teachers and administrators. It is likely that budget reductions beginning next year will put downward pressure on compensation for these individuals and thus serve as a headwind to income growth for the state. Moreover, around 9 percent of the state’s compensation is derived from federal or military employment. If the sequestration clause from the Budget Control Act goes into effect in January 2013, the Defense Department faces a $492 billion cut to funding over the next eight years.2 This could have some negative repercussions on military-related spending in North Carolina, which is higher on a per capita basis than the U.S. average.

Looking ahead, the outlook sees a mixed landscape for the Tar Heel State. While employment is picking up some, and home prices are improving at a relatively-strong rate, “headwinds” created by declining activity in Europe and China, as well as the uncertainty of the “fiscal cliff” could continue to exert negative pressure on potential growth. Their lackluster projections of 1% US GDP growth for the First Quarter 2013, combined with strong state ties to the overall national economy, could create continued sluggishness, especially in parts of the state that have yet to see significant growth following considerable recession period losses.

The outlook also includes summaries of economic activity and projections for key NC metropolitan areas.

Click Here for Wells Fargo’s latest North Carolina Outlook

Analysis Roundup for September 21, 2012

Here’s the latest collection of topics discussed in economic reports of note from financial institutions and government agencies.

BLS/NC Employment Security
North Carolina Unemployment Rate Highest in Southeast

This morning’s release of state-based employment data was not good for the Tar Heel State. Seasonally adjusted statistics indicate only 1,100 nonfarm payroll jobs created in August, while total unemployed grew by 5,900. North Carolina’s unemployment rate rose from 9.6% to 9.7%, making it slightly higher than South Carolina (9.6%) and keeping it significantly above other states in the Southeastern US.

Overall, 26 states saw their jobless rates go up. North Carolina’s unemployment rate remains among the highest in the nation.

Special Report
Quantitative Easing Returns for the Long-Term

At least through the remainder of the year, the Federal Reserve will be engaging in the purchase of Mortgage-Backed Securities in an effort to help improve general economic growth.

This latest round of “Quantitative Easing” was announced last Thursday by Federal Reserve Chairman Ben Bernanke following the latest meeting of The Fed’s Open Market Committee.

Officially, the purpose of Quantitative Easing (QE) is for the Federal Reserve to expand the supply of available money and use it to purchase low-risk securities. As a result, according to the official explanation, holders of other capital will redirect their investments to those with higher risks in an effort to achieve some sort of positive return.

Unlike prior rounds of QE that had specific limits on how much in securities could be bought overall, QE3 sets a monthly limit of $40 billion. At the present, it is intended to last through the end of the year. The Fed will also continue to move its holdings of short-term securities into long-term securities (i.e., Operation Twist) at a rate of $45 billion a month, for a total monthly impact of $85 billion.

While Chairman Bernanke mentioned QE3 being in place through the end of year, he also indicated that the program would be open-ended based on the evaluation of economic benchmarks:

From Wells Fargo Economics Group:

Importantly, the Fed noted that if labor market conditions do not improve “substantially”, it would continue the MBS bond-buying program plus potentially undertake further easing measures. Moreover, the Fed “expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens”. Bottom line, whenever rates do rise, we should expect a more gradual-than-normal tightening process to unfold.

Following the announcement late last week, general market activity was positive going into the weekend. However, with the arrival of less-than-impressive earning reports from several major corporations, along with continued reports suggesting lackluster overall economic performance, markets are trending downward.

Increasing the money supply via QE3 has the potential to facilitate greater inflation, especially with commodities. Initially, crude oil remained near $100/barrel following the QE3 announcement, though its price has dropped into the mid-to-low $90’s due to disappointing economic news. We’ll see later if this is having any impact on actual prices for gasoline.

Wells Fargo Economics Group
Second Half 2012 Outlook Undercut

Wells Fargo Chief Economist John Silvia cut the group’s projection for second half GDP growth to 1.5%, based on a host of negative reports involving most of the elements contributing to overall economic activity. Watch the video to learn more, or find a full summary of the comments here at Diminished Return.

USDA
Drought all but over for NC Farmlands

The USDA’s latest weekly report on pasture and range conditions finds that less than 10% of North Carolina’s fields are in “poor to very poor condition,” among the best ratings in the country and significantly better than the State’s modest results last year.

Overall, this is good news for the State’s agricultural economy, which should expect strong fall harvests, good prices in the commodities market, and great potential for winter crops and next year’s growing seasons.

NAHB/Wells Fargo & National Association of Realtors
Housing Growing, for a “New Normal” Environment

The latest update to the National Association of Homebuilders/Wells Fargo Housing Index shows continued improvement, as the index returned to a level unseen since mid-2006.

Housing starts over the summer improved compared to levels in recent years, though they are still significantly below levels that existed prior to the recession and bursting of the housing bubble.

Historic low-interest rates also contributed to a substantial increasing in sales of existing housing for August, with overall volume increasing 7.8% last month. For the year, sales are up 4.1%. Inventories of existing homes have also subsided from post-recession peaks, including a significant decline in distressed inventories.

However, we do not know how much distressed inventory being withheld by banks and investors still remains to be processed through the market. With the media home price increasing this year by 9.5%, there may be some reason to believe the worst is behind us, though it is not absolutely certain.

GasBuddy/FinViz
Oil slips a little, Gasoline does not 

Crude oil futures slipped a little this past week following news of continued economic uncertainty. Given the breakout of additional violence in the Middle East, including the murder of the US Ambassador to Libya, the fact that prices did not spike upward in light of growing hostilities on the ground suggests that the market for crude is stable, and thus demand is not growing on a global scale.

If global demand is not increasing, or is in fact declining, it is also an indication that China’s economic woes are greater than identified.

With respect to gasoline prices, there is typically a delay between fluctuations in crude to their appearance with respect to end product. At the same time, while corn prices have declined 7% in the past 2 weeks, they are still close to the historic high for the grain.

Consequently, we have yet to see a noticeable drop in prices for motor fuel compared to where they were at peak around the Labor Day holiday.

At the same time, North Carolina prices remain closer to the national average, indicating a peak price situation within the state itself.

QE3 may also play a role in keeping gasoline prices high, especially if greater inflation kicks in. Overall, gasoline prices not only significantly impact local government budgets, but they also have a large influence on disposable personal income. Higher fuel prices in August contributed to an increase in the level of total US retail sales, a situation where greater spending does not necessarily reflect improved economic activity.

Worth Checking Out

Here are some articles worth taking a look at involving NC local governments, or possible strategies for local budgeting and finance:

Wilmington Star News: Brunswick board moves to take control of health, DSS agencies

Daily Southerner: Edgecombe County Manager discusses human services consolidation

Triad Business Journal: Can Greensboro learn from Raleigh about how to build a performing arts center?

GoUpstate.com: Shutterfly moving facility, 600 jobs from NC to SC

Charlotte Observer: Bank of America declines to confirm job cuts

Daily Southerner: LGC rules Princeville rehiring illegal

PA Times: Social Media, Government Engagement, and Generation Y

Triangle Business Journal: UNC to offer MPA Program Online

Training Opportunities

Here’s information on upcoming online training events

October 10th – 2pm ET – FREE – Governing Magazine presents “Streamline Budgeting: Break Free from Outdated Processes”

October 18th – 1pm ET – FREE – ASPA presents “Mentoring Essentials: What Every Mentor and Protege Should Know”

Analysis Roundup for August 10, 2012

NCLGBA will post a collection of topics discussed in economic reports of note from financial institutions and government agencies on a regular (not necessarily weekly) basis.  Here is what we’ve found recently:

US Census Bureau
Annual Survey of Public Pensions: State-Administered Defined Benefit Data Summary Report: 2011 (Click Here for PDF Report) (Click Here for Website)

Based on self-reporting of states for their administered pension funds, North Carolina ranks 7th best in the country among states, with funds matching 94.4% of the State’s actuarial obligations for employees.  Only 15 states achieved obligation coverage of at least 85%.

Nationally, state-administered pension fund assets grew 14.6% in 2011, totaling $2.5 Trillion. Their national obligation coverage is approximately 75% (i.e., approximately $833 Billion Underfunded).

Given the variances in self-reporting due to differences in actuarial methods and assumptions for investments and costs of employee benefits, survey results are likely to change significantly over time as new GASB standards for reporting actuarials and obligations are implemented.

Wells Fargo Economics Group
Weekly Economic & Financial Commentary (Click Here for 8/10 Commentary)

Agency reports this week on trade balance, hiring plans and productivity point to emerging strength within the national economy. Volatility in Europe eased through most of the past week, while reports of dwindling demand for goods from China are creating concern in Asia and elsewhere. Growth for the remainder of the year in the US is projected to be less than 2% of GDP, impacted significantly by cutbacks in personal consumption.

USDA
Crop Production Report (Click Here for PDF)

The impact of severe drought is now being more accurately quantified with respect to anticipated crop yields. Corn and soybean production are expected to drop 12% and 13% respectively compared to last year. This will likely keep futures prices elevated and have an impact on the price of any products that utilize these common staples (fuel, clothing, food, etc.).

Domestic cotton production, on the other hand, is expected to grow 13%. As a result, prices for this commodity have returned to normal levels have severe spikes last year, providing revenue potential for North Carolina farmers.

Federal Reserve Bank of Richmond
Regional Profiles, 2011 (Click Here for Site)

The Richmond Fed updated these overviews for District, State, Metro and County-level economic performance this week.

Click Here for Richmond District Profile

Click Here for North Carolina Profile

The Richmond Fed also produces a monthly “Snapshot” report of economic indicators for the District and its member states (including North Carolina), which were last updated last Friday.

Highlights from these profiles and the Snapshot of North Carolina will be featured in the a future Analysis Roundup.

 

Wells Fargo Midyear Economic Update Call next Wednesday, June 27th

The Charlotte-based Wells Fargo Economics Group will host their Midyear Economic Outlook Update next Wednesday, June 27th, at 11am ET. The formal presentation, along with a question and answer session, will last approximately 90 minutes.

Here is a preview of what the call may cover:

As we suspected, the year thus far has been eventful in terms of economic performance and the evolving policy landscape. At the mid-point of the year, the U.S. economy has held on reasonably well, while growth globally — notably in Europe — has slowed substantially. Significant challenges persist to the domestic and global outlook. In particular, fiscal policy challenges may prove to be the highest near-term hurdle to economic growth.

Download Calling Instructions (PDF)

Download Presentation Slides (PDF)

Silvia, Brown discuss State of NC Economy

Silvia, Brown discuss State of NC Economy

On Tuesday, June 14th, Dr. John Silvia and Michael Brown of the Wells Fargo Economics Group hosted a conference call discussion on their analysis of the state of North Carolina’s current economy.

Their analysis showed that economic growth in North Carolina (based on GDP) is sustained, but not as the pace of prior recoveries. From an employment perspective, Dr. Silvia concluded that the Tar Heel State is encountering “a whole new ballgame.”

The call included a review of a presentation on economic indicators for the State as a whole, as well as four of its metropolitan areas. Silvia and Brown also responded to listener questions, providing some significant insight on the long term future for the State as it moves forward from a prolonged recession and recovery.

Copies of the presentation, along with information on accessing a replay recording of the conference call (good until July 15th), are available for download:

Download June 14th NC Economy Conference Call Presentation Here (PDF)

Download Information for June 14th NC Economy Conference Call Replay Here (PDF)

Link to News&Observer Story on Conference Call

Below is an itemized summary of conference call highlights:

From Presentation on Overall North Carolina Economy

  • Don’t have enough data for all NC metro areas, but do have enough consistent data for a certain set
  • Economic growth (based on GDP) is sustained, but not as the pace of prior recoveries
    • Poses a challenge for businesses and governments
  • Employment performance reflects “a different ballgame”
  • NC Coincident Index currently shows 1.3% growth
  • Total NC GSP grew 4% in 2010, diversified across most sectors (due to diversified economic mix)
    • Government GSP grew 1%
    • Information grew most at 7%
    • Manufacturing grew 6% (doing well on output, not as much on job growth)
  • Slide 8 (NC employment cycle) shows that statewide employment is still 7% below pre-recession peak level, has remained there for about 18 months
    • Labor market is changing
  • Most growth in Professional and Business Services employment (5%), Leisure and Hospitality (2.5%) and Finance (2%); Government down almost 2%; statewide employment change in last year up little less than 1%
  • Raleigh is best performing of metros on relative employment; Greensboro performing below state average
  • Personal income growing since 2009Q4 (up 4.2% in 2010)
  • Charlotte and Raleigh have per capita income higher than state average, rest of metros at or below average
  • NC has among least disparities of per capita income between metropolitan areas
  • Most significant job growth and income is in Professional and Technical Services, followed by Health Care (reflective of education)
  • Personal income cycle (for the employed) has broken back above pre-recession area (after long, deep decline)
  • Office absorption doing well
MSA Discussion (Asheville, Charlotte, Raleigh and Greensboro)

Asheville
  • Significant contraction with business and professional services (fewer retirees moving in), but continued growth in hospitality and leisure
  • Employment still 6% below pre-recession peak (trough lasting 24 months so far)
  • Asheville is a “drive to” destination, and gas prices will impact tourism
Charlotte
  • Nearly 6% growth in past year with professional and business services; declines with goods production, education, health services and government
  • Total employment still 8% less than pre-recession peak (has lasted about 24 months)
  • Some recent good news with job growth (Freightliner adding 600 jobs)
  • Some “headwinds” toward stability
  • MB: Based on current (slow) pace of recovery, it is likely that it will take “several years” for employment to return to pre-recession peak levels
  • JS: Charlotte will see a “quick blip” from the Democratic National Convention next year, creating unusual numbers created by temporary employment
Raleigh
  • 2.5% gob growth in past year, 9% for professional and business services, all sectors listed have seen growth or minimal decline (even government grew 2%, mostly on local level due to minimal tax base disruption)
  • Continue to see attractive environment for high-paying jobs
  • Employment cycle shows road to recovery, now 2% below pre-recession peak, though moving positively
Greensboro
  • Stagnant overall job activity in last year (slight increase); and layoff announcements continuing that reflect structural changes (10.3% unemployment rate)
  • Employment cycle shows that MSA is still more than 8% below pre-recession peak (almost reached 10% decline); long recovery a reality
Q&A (did best to capture their comments; did not inject commentary, so this what they said)
JS = John Silvia & MB=Michael Brown
  • It is important that North Carolina “deal with the hand its dealt” and “aspire for better times”
  • Current economy reflects modest employment gains, especially for modest and low skilled workers
  • Consumer spending is more modest
  • More than likely, state income and sales tax revenue will grow at a more modest rate than in the past, poses challenges
  • Home prices are down, and building permits are weak; mean that property tax bases will not be growing
  • Advantages for NC: well-educated, tech-savvy population; good climate; low (general) business costs
  • Economic growth within the state right now is “subpar”
  • Tourism growth will be limited by economic growth in general, will directly impact locations dependent on this industry (i.e., Asheville)
  • JS: Important to consider “pace of economic growth” compared to “pace of growth of commitments”; not where it was expected
  • Changes in structural unemployment? JS: Challenge today is that high school graduates do not have the skills they need for employment, even in manufacturing (computer literacy); big current challenge is lack of computer literacy amongst older population
  • Challenge for the unemployed include developing new skills and relocating
    • JS: “How do you get people to understand that they may have to move? What is your alternative?”
    • Greater magnitude problem for North Carolina since WWII
  • JS: Recovery losing steam? Market projected that economy would get back to 3% growth, and that’s not happening. Economy has lost steam due to several issues (Europe, gas prices, natural disasters); we do have sustained growth, but we have to deal with a 2% to 2.5% situation (unlike the past); don’t need to “dream” about a different hand
  • JS: Distribution of post-recovery jobs are very skewed; reflect competitive strengths and market preferences
    • We can compete on the basis of smart jobs, not unskilled
  • JS: Non-residential construction is improving (not overbuilt, seeing growth w/architectural buildings); state and federal governments see need for infrastructure development (Yadkin River Bridge); residential construction still in a 2-3 year (if not longer) “work out” period
  • JS: Seeing the same pattern with employment that NC has shown for last 20 years (pockets of decline in isolated, rural areas); NC has tried to help these areas, but they are just not economically competitive (if that means moving, that means moving)
  • JS: Inflation is rising, but this is not Jimmy Carter inflation; we’re seeing 3% inflation, higher rate than many retiree portfolios focused on cash and treasuries; don’t worry about deflation or hyperinflation, but focus on impact of 3% inflation
  • JS: Manufacturing output is growing, and it has higher value than before
  • JS: For younger people, goal is to encourage them to get at least a technical education (will provide sufficient opportunity, even better than 4-year schools)
  • MB: From an economic development perspective, educational composition of workforce is important to attracting jobs; climate is favorable to reducing supply chain disruption
  • MB: Does the (local) population have the skills sets for the jobs of tomorrow?
  • JS: “Hope” is not a strategy; there are some opportunities for older workers in their hometowns, but there are no guarantees on anything; more than likely, they need to get more education and move (started getting a little frustrated here); America has always been a country of movers; we need to get this across to people, including high school students (what to do? where to go?)
  • JS (on Agriculture): People like to eat and drink wine, so there is opportunity; dollars to doughnuts, this state can do it; challenge is dealing with technology involved and global competition; world is moving up the protein chain (opportunity for us)
  • JS (on inflation): Food and energy prices are coming up; significant impact on middle and lower income citizens; composition of spending by income category is different; less exposure to inflation the more income you earn