Treasurer Cowell questions fiscal impact of Charlotte Airport Transfer Proposal

Per the March 28th League LINC Bulletin of the North Carolina League of Municipalities:

A letter from the Office of the State Treasurer this week indicated that a legislative transfer of ownership of the Charlotte airport could increase the cost of borrowing for all cities across North Carolina. The letter to Sen. Bob Rucho, the primary sponsor of SB 81 Charlotte Regional Airport Authority — which would transfer ownership of Charlotte Douglas International Airport from the City of Charlotte to a newly-established Charlotte Regional Airport Authority — indicated that transferring ownership of the airport could result in prolonged and expensive litigation. The uncertainties created by such a move could also undermine the ability of other cities and towns to issue bonds because they would have to be disclosed to potential lenders in the future, impacting borrowing costs and desirability. The letter was based on the opinion of outside bond counsel obtained by the Treasurer’s office. In an article in the Charlotte Observer supporters of the legislation downplayed the concerns. SB 81 is currently scheduled to be discussed in the House Transportation Committee on Tuesday.

Click Here to View the State Treasurer’s Letter (Per Charlotte Observer)

Analysis Roundup for October 5, 2012

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

BLS/NC Employment Security
Employment Picture Differentiate Across NC Counties

Last Friday, NC Employment Security and the US Bureau of Labor Statistics provided county-level updates for total employment and unemployment rates. 80 counties within the state experienced a decrease in total employment, while 73 saw a decrease in their unemployment rate. Reduced labor force participation within the working age population, caused in part by terminations of summer employment, attributed to this contrast in results.

BLS
National Employment Improves a Little in September

Total nonfarm employment growth for September (Seasonally Adjusted) was 114,000 nationwide. Because of this and adjusted improvements to job growth reported in July and August, the national unemployment rate was reduced to 7.8%, its first sub-8% reporting since January 2009.

National employment participation continues to lag, though up slightly in September to 63.6% of the working age population. Since last September, the total labor force (those working or looking for work) has only increased 827,000, while the working age population has increased 3.7 million. If labor force participation was consistent with September 2011 (a distressing 64.1%, compared to a pre-recession average of 66% to 67%), the unemployment rate would be 8.5%.

On the bright side, since January 2011, private sector nonfarm employment has grown nationally by nearly 3.3 million.

North Carolina unemployment, as of August 2012, still remains among the highest rates in the country, and more than a full percent above the nationwide level.

ADP
National Job Growth Remains Subdued

The National Employment Report provided by payroll processor ADP (released today) shows US nonfarm private employment growing by 162,000 last month (seasonally-adjusted). Job growth for July and August were also revised downward by about 9%-10% per month.

About 89% of these new jobs (148,000) are in the service sector, while the remainder are in goods production. 50% of total reported job creation was with small businesses with less than 50 employees.

Dr. Walden
September NC Leading Indicator Index Dropped 0.8%

For the third month in a row, the North Carolina Leading Economic Indicator Index declined, this time falling 0.8% due to declining manufacturing and building activity.

NC Treasurer
New Website, e-Newsletter Launched

North Carolina State Treasurer Janet Cowell recently-released a newly-designed website, along with a monthly e-newsletter.

The October issue of the newsletter, published today, features information on the Treasurer Office’s investigation of LIBOR Rate manipulation and State Pension Fund performance.

For the 2011-12 Fiscal Year, the Pension Fund achieved 2.21% growth, declining 1.23 during the second quarter of calendar year 2012. Recent losses were concentrated in global equity investments, while securities, real estate and private equity holdings performed well.

Click here to sign-up for Treasurer Cowell’s e-newsletter.

Wells Fargo Economics Group
October 5th Weekly Commentary Highlights

  • September job growth met expectations, but adjusted improvement for summer was unexpected;
  • Economic activity in Europe and China remains sluggish;
  • Interest Rates should remain low as a result of QE3;
  • Low interest rates should have positive influence on car and truck sales

GasBuddy/FinViz
Oil below $90, Unleaded below $3.70

Despite tension in the Middle East, crude oil futures continued to slide, though they remain prone to intermittent volatility due to mixed economic signals. Whether or not employment growth is a sure thing in the US, continued economic slowdown in Europe and China is putting strong downward pressure on crude in comparison to its near-$100/bbl position in late-summer.

 

 

As for gasoline, we’re starting to see some relief, with the State average dropping below $3.70/gallon this week.

 

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: Industry seeks 30% increase in homeowners insurance premiums for beaches, inland

Triad Business Journal: Bank of North Carolina awarded SBA “preferred lender” status

Triangle Business Journal: Wake OKs changes to make RTP more urban

ASPA Blog: Management Lessons from the Haul Road

NCDOT: Economic Assessment for I-95 Improvements Begins

 

NC Treasurer Cowell Hires New State Pension Fund Manager

As reported this afternoon by Carolina Journal, North Carolina State Treasurer Janet Cowell has hired Shawn Wischmeier, current Chief Investment Officer for the Indiana Public Employees’ Retirement Fund, to take over as Chief Investment Officer of the North Carolina Retirement Systems.

According to the Carolina Journal article, Wischmeier has helped lead Indiana’s pension program through a significant transformation into one of the strongest plans in the country. Their investment portfolio grew 22.61% in value in 2009, higher than the national average of 19.76% and significantly higher than North Carolina’s own performance of 15.08%.