Analysis Brief – April 7, 2014 (NC Economic Outlook Summary)

Don’t forget about our upcoming Summer Conference, July 16th-18th at Grandover Resort in Greensboro (click here for more info).

NC Economic Outlook Summary

Wells Fargo released a seasonal outlook on North Carolina’s economy late last Thursday (click here). The report covers several metrics and provides comprehensive information on statewide trends. Here are the highlights:

  • Statewide employment conditions are improving, with net growth in jobs across all industry groups within the state and significant reductions in the unemployment since last summer. Professional and business services provide the largest share of job growth (4.5%).
  • About 70% of job growth the past 4 years took place in the Raleigh, Durham-Chapel Hill and Charlotte metro areas (MSAs).
  • Statewide manufacturing job growth lags other sectors, creating issues of disparity with manufacturing-intensive areas of the State.
  • Commercial real estate activity improving in areas of strong job growth.
  • Apartment construction in Charlotte is matching demand, while Raleigh’s increased construction rates (compared to demand) provide a slight increase in vacancies.
  • Single-family housing construction permits continue showing some improvement, but they still fall significantly below pre-recession levels.
  • Housing market prices, as measured in North Carolina by the CoreLogic HPI, show continued, modest improvement, with the metric appearing close to pre-recession levels. Nationally, the rate of recent growth is faster, but the index remains significantly below pre-recession levels.

The report also included these highlights regarding North Carolina’s key metro areas:

  • Raleigh experienced 4% year-to-year growth in total nonfarm employment, driven by nearly 10% growth in business & professional services.
  • Employment growth remains slow in Greensboro and Winston-Salem, reflecting continued challenges in the Triad area.
  • Asheville and Charlotte experienced strong growth in line with statewide trends (~3% to 4%), with Asheville’s housing market also recovering at a strong rate.

Following requests from several jurisdictions, we asked for and received chart sets for each North Carolina metro (see links below for PDFs):

North Carolina (Statewide)




Durham-Chapel Hill







Rocky Mount



Connaughton Updates Sector Growth, Job Forecasts

Last month, UNC-Charlotte’s John Connaughton produced his spring 2014 economic forecast, reporting 2013 gross state product (GSP) growth of 2.5% and 2014 GSP growth of 3%. Agriculture experienced the most significant year-to-year growth in GSP for 2013 (+22.7%), following by entertainment & hospitality (+4.9%), transporting, warehousing & utilities (+4.3%) and business & professional services (+4.1%). Manufacturing was relatively unchanged (+0.1%) and reflected about 20% of the total state economy (second to finance, insurance and real estate). Agriculture is expected to grow another 11% in 2014, with manufacturing projecting 2.7% growth, 2.2% for entertainment & hospitality, and 1.8% for business & professional services. Connaughton also anticipates net statewide job growth of 60,200 jobs  (1.5%) in 2014, slightly less than 2013 growth (64,500, up 1.6%). Connaughton found the information sector with the highest rate of growth in 2013 (+7.6%), but he does not anticipate sector growth continuing at the same pace for 2014 (+0.7%), surpassed by transportation/warehousing/utilities (+3.3%), construction (+3.7%), and entertainment/hospitality and business/professional services (+1.7%).

Walden’s LEI Outlook Not Promising

For March, the NCSU Index of Leading Economic Indicators, presented by Dr. Michael Walden, experienced another decline, dropping 1.6% to its lowest level since last August. The overall trend remains positive, and 6% than last March, and is potentially impacted in recent months due to traditional winter slow down and worse-than-usual weather. Permit activity, hours worked and employment earnings all showed declines, as did the number of jobless claims. Click here to review the March report.

PNC Identifies Improved Business Owner Outlook

PNC Bank’s latest survey of NC-based small-and middle-market business owners (click here) provided some room for optimism in coming months. 48% of respondents indicated anticipated growth in sales over the next six months, up significantly from 34% last October. Expectations for increased profit grew slightly from 32% to 37%, while hiring growth expectations grew a little, from 8% to 12%. Increased anticipation for growth was also met with slight reduction in respondents expecting contraction in sales (from 9% to 7%) and profits (from 17% to 16%). An unchanged 8% still anticipate decreasing staff, while 76% anticipated remaining the same. With respect to economic outlook, strong optimism declined with respect to both the national (from 11% to 8%) and in-state economies (from 15% to 10%), with prospects for North Carolina still remaining stronger than nationally. Moderate optimism on the state optimism grew from 41% to 54%, helping reduce pessimism from 42% to 36%. At the same, the survey also showed declines or continued lows in the rates of businesses anticipating upcoming capital investment (53%), pay raises (19%), taking out new loans (14%), and housing price increases (39%). Substantial majority of respondents (70%) do not anticipate increasing prices during the next six months.

Gas Prices, Now and Upcoming


Crude oil prices have subsided some from recent spikes facilitated by unrest in Ukraine, now within a couple percentage points of last year’s mark. As for fuel, prices for unleaded are picking up with the arrival of the spring, though are still a few cents below their levels 12 months ago. The Energy Information Administration (EIA) will release its next short term outlook this Tuesday. Their March report anticipates stable prices for the coming year, with potential for a decline in annual average price for 2015. Locally, Diesel prices also appear to be showing some reduction, at least not growing in relation to recent increases with unleaded.


Analysis Brief – January 10, 2014


This post may be updated as information become available over the course of the next couple days.

With the New Year comes resolutions, and predictions. This is especially true about the direction of the economy. During our Winter Conference, Wells Fargo Economist Michael Brown shared a few, as noted in the following slides:

The day before this presentation in Asheville, fellow Wells Fargo Economists John Silvia, Jay Bryson and Mark Vitner shared their 2014 Economic Outlook. Overall, they see continued growth in the overall economy, while they are less “excited” about accelerating employment growth, a challenging issue for many places across North Carolina and the rest of the country.

This week, economic outlook presentations hosted by the North Carolina Chamber of Commerce (Monday) and Greater Raleigh Chamber of Commerce (Friday) offered additional perspectives.

NC Chamber/NC Bankers Association Economic Outlook

Most notable presentations during this annual morning meeting and luncheon were a conversation on the future of North Carolina’s military presence, and its economic impact, along with an update from Governor Pat McCrory.

Click Here for NC Military Presence Discussion Video

Click Here for Governor McCrory’s Remakrs Video

 (Running Commentary)

Presentations Coming Soon

Greater Raleigh Chamber 2014 Economic Outlook

Two of the strongest economic voices in the Mid-Atlantic headlined this event. Wells Fargo’s John Silvia joined Richmond Fed District President Jeffrey Lacker for a comparative presentation of outlooks for the coming year, as well as discussion with the audience.

Click Here for Video of the Presentations by Silvia & Lacker

 (Running Commentary)

Click Here for Richmond Fed President Lacker’s Prepared Remarks

Forecasts from North Carolina Economists

Several noted economists across the state have updated their outlooks for the coming year.

Dr. Michael Walden shared his seasonal and start-of-year outlook back in December. Dr. Walden anticipates 2.75% growth in 2014 for the national economy, with 100,000 new jobs for North Carolina residents, though many of those will be concentrated in select metropolitan areas, like Asheville, Charlotte, Raleigh and Durham.

Click Here for Dr. Walden’s Winter 2013/14 Outlook

Dr. Woody Hall with UNC-Wilmington shared his outlook for Southeastern North Carolina earlier this week during a forum hosted by the Wilmington Area Chamber of Commerce. Hall predicts 2.5% economic growth for the Wilmington-New Hanover County area in 2014, consistent with 2.5% growth this past year.

Click Here for Dr. Hall’s 2014 Outlook Presentation

Appalachain State’s Harry Davis offered an overview during the NC Chamber of Commerce/NC Bankers Association forum this past Monday. Click here for an article summarizing his comments (TBJ).

Dr. John Connaughton of UNC-Charlotte has not yet released an outlook for 2014 (stay tuned for an update).

Analysis Roundup – June 17, 2013

Next Analysis Roundup scheduled for June 24th


Click Here to Register for Summer 2013 Conference Registration & Hotel Info

The conference rate rooms at Shell Island Resort are sold out. The page linked above has information on alternative hotel options.

(From Heather Drennan) The last day to register is Wednesday, June 26. This allows us to work with the hotel to ensure there are enough chairs and enough food. Also, we are on the cusp of being able to add back a snack break that was cut during the recession. If we have enough registrations by the beginning of next week (or at least an email telling Justin Amos the check is in the mail), we might be able to add it back. Yum. Cookies.

Recent Job Announcements (Click on Position Title)

Budget Director – Town of Cary (Open Until 7/15/13)

Career Advice Focus of Most Recent “An Expert Opinion”

Dr. Steve Straus, CEO and Founder of Developmental Associates LLC, shared with us some specific qualities we need to develop to be considered strong candidates for management positions in local government, including those in budgeting and finance.

Click Here for Dr. Strauss’ Career Advice

Local Governments Significantly Impacted by latest Senate Tax Reform Plan

If you happened to receive alerts from NCLM or NCACC, or paid attention to news from Raleigh, you learned just how significant an impact the Senate’s latest tax reform proposal will have on current sources of local government revenue.

Friday’s NCLM LeagueLINC Bulletin reiterated the assessment they provided in an overview of the Senate plan on Thursday (link to by-municipality impact analysis, PDF).

Click Here for the latest bulletin from the NC Association of County Commissioners

How’s the Federal Budget Doing?

Wells Fargo updated their outlook this afternoon on how the Federal Government’s bottom line is performing:

Given the higher-than-expected revenue collections along with continued outlay reductions, we have revised our forecast for the federal budget deficit to $850 billion from $900 billion for the 2013 federal fiscal year. We have also downwardly revised our budget deficit forecast for federal fiscal year 2014 to $750 billion to reflect the higher-than-expected tax revenues from January’s tax policy changes as well as our expectation that the budget sequestration will remain in effect through the next fiscal year. The ongoing cuts to federal spending will continue to negatively affect headline GDP growth through the end of our current forecast horizon of 2014.

FY2012 NC Municipal Benchmarking Statistics Available

(From UNC School of Government) The School of Government’s Final Report on City Services for Fiscal Year 2011-2012: Performance and Cost Data presents data for fourteen North Carolina cities in the service areas of:

  • residential refuse collection
  • household recycling
  • yard waste/leaf collection
  • police services
  • emergency communications
  • asphalt maintenance and repair
  • fire services
  • building inspections
  • fleet maintenance
  • central human resources, and
  • water services.
This report is part of the ongoing North Carolina Benchmarking Project, a joint undertaking of the School of Government and the North Carolina Local Government Budget Association.
Click here for more information or to purchase a copy of the report:
Publication information:
Title: Final Report on City Services for Fiscal Year 2011-2012: Performance and Cost Data
Prepared by: Dale Roenigk
Edition: 2013
No. of pages: 375
Order number: 2013.07
Price: $35.00, plus tax and shipping
If you have questions about this title or other School of Government publications, please email or call 919. 966.4119, then press #1.

Connaughton’s Perspective on NC Economy

UNC-Charlotte Economist John Connaughton updated his economic forecast earlier this month (Click Here for PDF Slides). Here are some of his findings:

Connaughton expects the North Carolina economy to increase by an inflation-adjusted rate of 1.9 percent during 2013. The first quarter Gross State Product (GSP) is expected to increase at an annualized real rate of 1.7 percent. During the second quarter, GSP is expected to increase again, at an annualized real rate of 2.7 percent. In the third quarter, GSP is expected to pick up and record an annualized real growth rate of 2.5 percent. In the fourth quarter of 2013, GSP is expected to grow at an annualized real rate of 3.2 percent…

Connaughton predicts that 13 of North Carolina’s 15 economic sectors are forecast to experience output increases this year, with the strongest performers including

  • Business and Professional Services (+5.8%)
  • Mining (+3.2%)
  • Transportation, Warehousing and Utilities (TWU) (+3.1%)
  • Education and Health Services (+2.8%)
  • Wholesale Trade (+2.4%)
  • Hospitality and Leisure Services (+2.2%)
  • Information (+2.1%)

On the jobs front, Connaughton predicts North Carolina to gain 62,500 jobs in 2012, a workforce increase of 1.5%. 12 of the state’s 14 nonagricultural sectors should see job growth, with the best prospects taking place with information, hospitality and leisure services, and business and professional services.

Connaughton also sees a stronger economy for North Carolina moving forward. While 2013 GSP growth may remain pedestrian at 1.9%, the economist sees 2014 growth outpacing the current year by 3%.

Should We Evaluate Charities by Overhead?

According to a recent initiative by the heads of the three leading charity monitoring efforts, evaluating the performance of a nonprofit primarily on the basis of their overhead costs is not a good idea.

The percent of charity expenses that go to administrative and fundraising costs—commonly referred to as “overhead”—is a poor measure of a charity’s performance.

We ask you to pay attention to other factors of nonprofit performance:  transparency, governance, leadership, and results.  For years, each of our organizations has been working to increase the depth and breadth of the information we provide to donors in these areas so as to provide a much fuller picture of a charity’s performance.

That is not to say that overhead has no role in ensuring charity accountability. At the extremes the overhead ratio can offer insight: it can be a valid data point for rooting out fraud and poor financial management.  In most cases, however, focusing on overhead without considering other critical dimensions of a charity’s financial and organizational performance can do more damage than good.

In fact, many charities should spend more on overhead.  Overhead costs include important investments charities make to improve their work: investments in training, planning, evaluation, and internal systems—as well as their efforts to raise money so they can operate their programs.  These expenses allow a charity to sustain itself (the way a family has to pay the electric bill) or to improve itself (the way a family might invest in college tuition).

When we focus solely or predominantly on overhead, we can create what the Stanford Social Innovation Review has called “The Nonprofit Starvation Cycle.”  We starve charities of the freedom they need to best serve the people and communities they are trying to serve.

Click Here for More on this Topic