NC Mayors Study Examines Urban Distress

Click Here for the Full Report (PDF)

Click Here for Infographic (PDF)

(PRESS RELEASE – Charlotte, N.C.) – Members of the North Carolina Metropolitan Mayors Coalition today released data detailing pockets of severe poverty and unemployment –distressed census tracts – in North Carolina’s larger cities. The data shows that nearly 580,000 North Carolina residents live in distressed tracts, with 62 percent of these living in metropolitan regions. The report draws attention to the challenges growing urban cities face in ensuring all residents enjoy the economic opportunities being part of a large city affords.

This Infographic (Click to Enlarge) provides a summary from the "Unmasking Poverty and Unemployment in Urban North Carolina" Report, released February 28th by the NC Metro Mayors Coalition.
This Infographic (Click to Enlarge) provides a summary from the “Unmasking Poverty and Unemployment in Urban North Carolina” Report, released February 28th by the NC Metro Mayors Coalition.

A distressed neighborhood, or tract, is defined by the following characteristics;

  • Unemployment 50 percent greater than North Carolina’s unemployment rate,
  • Annual per capita income 1/3 lower than North Carolina’s per capita income, and
  • Poverty rate 50 percent greater than North Carolina’s poverty rate.

As of 2010, the Census Bureau had designated 18 areas as urban in North Carolina, and the data shows each of these areas contains at least one distressed tract. Of the 162 severely distressed Census tracts identified, 106 are located in urban areas. Of the 56 tracts classified as rural, 45 are located in urban clusters and only 11 are in truly rural areas. Twenty of the 25 most distressed tracts in North Carolina are urban.

“While North Carolina’s metro areas have been the state’s economic engines driving growth and prosperity, cities have also been grappling with pockets of slow or stagnant economic recovery in neighborhoods that leave significant numbers of citizens struggling in poverty,” said Raleigh Mayor Nancy McFarlane, chair of the N.C. Metro Mayors. “Further study is needed to better understand and identify needs within the urban pockets of poverty. As we look at poverty across the state, it’s important that we develop targeted strategies to expand economic opportunities to all distressed areas, both rural and metro, to ensure all citizens living in poverty are being provided equal opportunities to improve their economic outlook.”

While North Carolina’s metropolitan cities are experiencing dynamic population growth and are included regularly in national rankings of the nation’s top cities to live in, the challenge lies in bringing that success to each neighborhood in the city. High-level views, such as county statistics, fail to adequately capture the economic realities of these pockets of distress. The overall growth and opportunity experienced in the metro counties masks distressed urban tracts.

  • The per capita income in urban counties is $27,364 but is just $12,059 in distressed urban tracts.
  • The poverty rate in urban counties is just 15 percent but leaps to more than 40 percent in distressed urban tracts.
  • The unemployment rate is 9.3 percent in urban counties but 21.4 percent in distressed urban tracts.

African-Americans, children and the elderly are disproportionately impacted by the poverty in urban distressed tracts. More than 60 percent of those living in distressed urban tracts are African-American, and 16 percent of North Carolina African-Americans live in a distressed tract. Nearly 60 percent of children living in distressed urban tracts live in poverty, compared with slightly less than 23 percent across the state. For those over 65, the poverty rate in these distressed areas is more than 20 percent, double the 10 percent rate seen across the state.

The data is drawn from the report, “North Carolina’s Distressed Urban Tracts: A look at the state’s economically disadvantaged communities,” authored by William High for the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill.

For more information on the report, contact Todd Owen, associate director of the Center for Urban and Regional Studies at or 919-962-3076 or William High at, or 404-345-0291. For information on the N.C. Metropolitan Mayors Coalition visit the website or call Julie White at (919) 539-7871.

Analysis Brief – October 22, 2013


We’re going back to Asheville, December 11th-13th, for our 2013 Winter Conference at the Omni Grove Park (Inn). Click here for the registration packet and hotel reservation information. Members need to act quickly in order to take advantage of the group hotel rate!

Click here for a recent column by our Winter Conference Keynote Speaker, Steve Straus.

Remember, in order to take advantage of the Membership Rate for the Conference, you need to renew your members for 2013-14.

Also, if you are asked by your Purchasing Office for our E-Verify Affidavit, click here to download a copy.

FY 2014 Powell Bill Allocations Grow… Slightly

NCDOT released their FY 2014 Powell Bill Allocation Report earlier this month. Overall allocations increased 2% compared to last year, with most of the 507 eligible municipalities seeing little to no growth in allocations.

Click here to view “State of Powell Bill” Analayis at

Click here for NCDOT FY 2014 Powell Bill Allocation Report (PDF)

Data Backup Expected After Shutdown

With the end of the Federal shutdown, expect delays in delivery of monthly and quarterly economic data. As it becomes available, it will be featured in future briefs.

Construction Spending Improves

Today’s report showed that August construction spending was up 0.6% nationally in August , with the August increase upgraded to 1.4%. Home improvement activity, which would drive retail sales tax revenue, remains “restrained” according to Wells Fargo, with stronger growth in multi-family construction over the summer than single-family housing.

Slow Job Growth Disappoints


Wells Fargo predicts that Quantitative Easing will continue at existing levels, with August employment report from BLS showing only an increase of 148,000 jobs. The national unemployment rate did drop to 7.2%, but this was once again driven more by labor force contraction rather than employment growth.

NC’s Job Growth Created by Metros

How significant of a difference in job growth in North Carolina’s metropolitan areas compared to the rest of the state?

  • Since January 2007, North Carolina payroll has grown by 75,771 (unadjusted, as of August 2013).
  • In that same timeframe, North Carolina MSA payroll has grown by 135,660. This means non-MSA areas have seen net payroll contraction of nearly 60,000 during the same period.

For the first 8 months of this year (January-August), non-MSA payroll growth (+21,703) kept pace with slower-than-expected MSA payroll growth (+23,482). At the same time, non-MSA payroll growth for the period was its lowest level since 2009.

Analysis shows most of the non-MSA payroll growth in the first 8 months of the year is seasonal, followed by drop-offs in the final four months of the year. Conversely, MSAs continue to see growth in later months, influenced by overall growth, larger presence of holiday retail and year-around employment needs.

In the final four months of 2012, non-MSAs saw net payroll contraction of more than -20,000. Since the start of the last recession, MSAs have contributed more than 80% each year to net job growth in North Carolina (92% in 2012 alone).

As for MSAs themselves, the Top 10 MSA labor markets accounted for nearly 134,000 net payroll increase since January 2007.

Possible Bright Spot on Retirement Contributions

(From NCLM) The Local Government Employees Retirement System Board of Trustees heard this week that the financial condition of the retirement system could allow the FY14-15 employer contribution rates to be reduced 0.13 percentage points below the FY13-14 level. Favorable market returns on invested assets and lower than assumed payroll increases led to the improved financial condition. The Trustees will decide early in 2014 whether to use the improvement to reduce the employer contribution rate by the full 0.13 points, or to use some or all of the available funding to provide a cost of living adjustment to retiree benefits.

Overview of Provisions in Legislation ending Shutdown, Raising Debt Ceiling

(From NASBO) Late in the evening on October 16, Congress voted to pass a bill (HR 2775) to fund the federal government through January 15, 2014 and suspend the debt ceiling until February 7, 2014. The Treasury Department will likely be able to take extraordinary measures to continue borrowing past February 7. The Senate passed the measure by a vote of 81-18, and the House followed by approving the measure by a vote of 285-144. The bill was signed into law by President Obama shortly after midnight on October 17, ending a 16-day long government shutdown and extending the Treasury Department’s ability to borrow to help pay for federal expenses. As part of the agreement, the House and Senate also agreed to establish a bicameral budget committee to negotiate a broad budget deal for fiscal 2014, with instructions to complete a conference report by December 13 to allow lawmakers time to draft and pass appropriations before stopgap funding expires in mid-January.

Key Provisions Included in Bill:
The bill, reflecting an agreement reached by Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY), funds most government operations at fiscal 2013 post-sequestration spending levels. The Congressional Budget Office (CBO) estimates that the legislation results in budget authority of approximately $986.3 billion on an annualized basis. The measure makes only one minor change to the Affordable Care Act by providing for stricter income verification requirements for individuals applying for health care exchange subsidies. Other key bill provisions of relevance to states are summarized below. Many of these provisions were added to the measure as new anomalies shortly before the bill was passed.

State Reimbursements: Section 116 of the bill includes explicit language to clarify that states that “used state funds to continue carrying out a Federal program” or furloughed federally-funded employees “shall be reimbursed for any expenses that would have been paid by the Federal Government during such period had appropriations been available, including the cost of compensating furloughed state employees.” The legislation stipulates that this provision applies only to federal programs that states were carrying out prior to the shutdown. The provision applies to any period in fiscal 2014 when a lapse in appropriations occurs, not just the shutdown that took place in October 2013.

Effective Date: Under the bill, fiscal 2014 appropriations are retroactively dated to begin on October 1, 2013, which should help ensure federal grants to states are made whole and do not see any reductions as a result of the shutdown.

Temporary Extensions for Expired Mandatory Programs: The bill extends authorizations for several programs that expired at the end of federal fiscal 2013, such as Temporary Assistance for Needy Families (TANF) and related programs, the Supplemental Nutrition Assistance Program (SNAP), the Emergency Food Assistance Program (TEFAP) Commodities, and the Senior Farmers’ Market Nutrition Program.

Backpay for Furloughed Federal Employees: Section 115 of the measure provides for retroactive pay for federal employees, as well as District of Columbia employees, who were furloughed during the shutdown.

Low Income Heating Assistance Program (LIHEAP): A provision is included to clarify the LIHEAP formula for the distribution of funds to states to ensure funds are allocated consistent with previous years.

Additional Funding for Fire Suppression: Two sections in the bill provide additional funds for the Interior Department and the Forest Service to support firefighting activities.

Disaster Aid for Colorado: One provision raises the cap on federal highway emergency relief funds that can be distributed to the state of Colorado from $100 million to $450 million, to be used to support repair and recovery efforts from recent flood damage.

Budget Autonomy for the District of Columbia: The bill provides the District of Columbia the authority to use local funds to operate throughout fiscal 2014.

Federal Funds Information for States (FFIS) published a budget brief for subscribers providing more in-depth analysis of the bill and its implications for major grant programs for states. This FFIS table, available to the public, lists overall funding levels for major discretionary and mandatory grant programs based on the October 17th budget agreement.

Provisions Excluded from Bill
It is also worth noting several provisions that were excluded from the bill. During the final round of negotiations in Washington over a deal to end the shutdown and raise the debt ceiling, there was talk of a deal that would include additional flexibility for federal agencies to implement reductions under the sequester. However, such a provision was left out of the final agreement. While Congressional Republicans generally favor such a change, Democrats view it as a mechanism to help keep the sequester in place and therefore have been inclined to oppose additional flexibility for agencies. Another item missing from the bill is a provision explicitly allowing for states to be reimbursed for the expenses incurred from opening national parks during the shutdown. The U.S. Interior Department has said it would need explicit permission from Congress to authorize reimbursement to states for such expenses. Companion bills that would do this have already been introduced in both the House (HR 3286) and Senate (S 1572). During negotiations leading up to the agreement, there were also proposals to prohibit the Treasury Department from using “extraordinary measures” to avoid breaching the debt ceiling and delay the need for a debt limit increase. However, no such provision was included in the final bill.

Articles of Interest

McCrory predicts State might be forced to expand Medicaid (NC Spin)

Mental Health Gaps jeopardize Public Safety (Civitas)

Amtrak reaches Agreements with State to preserve Corridors (Press Release)

Amtrak sets Ridership Record (Press Release)



Analysis Brief – October 14, 2013

Just because the Federal Executive Branch is turning off websites and not issuing economic reports as a result of their Shutdown does not mean there is nothing to report.

Where are We on the Shutdown & Debt Ceiling?

(From NASBO) As of the morning of Monday, October 14, Congress has yet to reach an agreement on both ending the federal government shutdown and raising the debt ceiling. The partial shutdown of federal government services has now been in effect since fiscal 2014 began on October 1, while the Treasury Department says it will be unable to meet its obligations beginning on Thursday, October 17. For months, the U.S. Treasury has been taking what are known as “extraordinary measures” to extend the nation’s borrowing authority while complying with the statutory debt limit, which was officially reached in May of this year. Late last week, negotiations between the administration and the House broke down and most of the discussions regarding raising the debt ceiling and ending the shutdown are now taking place in the Senate. A bipartisan group of senators has been working on a plan that would reportedly extend the debt ceiling longer than the previously discussed six-week period, would include a two-year delay on the 2.3 percent tax on medical devices that was included as part of the Affordable Care Act, and would fund the federal government at least into next year. Currently, there is an impasse in the Senate regarding the length of a continuing resolution (CR) and the funding levels, with some Republicans in the Senate pushing for a longer CR that would include a second year of sequestration cuts, while Democrats have expressed concerns about new sequester cuts scheduled to be implemented in mid-January. Some Republicans have expressed a willingness to give federal agencies greater flexibility in carrying out the sequester cuts, but do not want to see the overall spending cap raised in fiscal 2014.

Need Economic Information?

As you may have noticed, agencies within the Executive Branch shut down several websites that serve as regular sources of data for public sector analysis, including that at the local level. If you are looking for substitute sources of data, please consider the following alternatives:

Google Public Data (National Unemployment & GDP)

NC Division of Employment Security (State & Local Employment Data)

AccessNC (State & Local Economic Data)

FRED – Federal Reserve Economic Data (Repository of Economic Data)

US Bureau of Labor Statistics (Employment & Unemployment Data)

NC State Data Center (Population, Economics, etc.)

How’s the Job Market?

While national reports on unemployment from BLS are suspended for now as a result of the shutdown, we do have another metric available, courtesy payroll processing firm ADP:

Private sector employment increased by 166,000 jobs from August to September… The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. August’s job gain was revised down from 176,000 to 159,000.

Strongest sector growth was in trade/transportation/utilities (+54,000). Small businesses (less than 50 employees) added 74,000 jobs, while large businesses (500 employees or more) grew by 64,000.

Consumer Debt Increasing, Optimism Muted

Total consumer debt grew by nearly $14 billion in September, with the increase entirely due to nonrevolving debt growth likely tied to purchases of housing and vehicles. Revolving debt (i.e., credit cards) actually dropped by nearly $1 billion.

The Conference Board’s Consumer Confidence Index dropped more than 2% in September, driven by a more significant drop in future expectations.

Says Lynn Franco, Director of Economic Indicators: ‘Consumer Confidence decreased in September as concerns about the short-term outlook for both jobs and earnings resurfaced, while expectations for future business conditions were little changed. Consumers’ assessment of current business and labor market conditions, however, was more positive. While overall economic conditions appear to have moderately improved, consumers are uncertain that the momentum can be sustained in the months ahead.’

Small business owners also expressed pessimism, with the NFIB Optimism Index dropped 0.2 points, with an 8-point drop in future business condition expectations.



(From Wells Fargo)The September figure from the NFIB does not fully reflect the effect of the government shutdown. Still, anxious anticipation of the shutdown may have been reflected in the fact that the biggest drag on the index was an eight point drop in expectations for improvement in the economy. One of the questions in the survey asks small businesses about the single most important problem that they face. In the early stages of the recovery in 2010, the answer was overwhelmingly business concern about poor sales.

That concern has been displaced more recently as businesses now cite regulation and taxes as their top concerns. The drop in expectations for improvement in the economy combined with smaller declines in earnings trends and hiring plans were enough to swap the more modest gains in other areas. One notable bright spot was the three point increase in rising expectations for future sales.

Homebuilders are also showing some slowing of expectations.



(From Wells Fargo) Confidence among home builders has improved markedly over the past year, with the NAHB/Wells Fargo Housing Market Index (HMI) increasing 18 points. Recently, however, gains have slowed; in September, the HMI was unchanged at 58 and up only two points from July. In addition to noting continued difficulty securing financing for new developments and rising labor costs, higher mortgage rates are reportedly weighing on builder sentiment. A dip in mortgage rates since the FOMC’s announcement not to begin tapering may spur some buyers to pull the trigger and lead to a pickup in single-family sales. Prospective buyer traffic continued to rise in September, indicating buyers remain in the market, even if they are slightly more hesitant. However, with increased turmoil in Washington weighing on the outlook, it would not be surprising to see builder confidence dip in October.

 Housing Market Impacted by Shutdown (Because…)

The US Department of Agriculture’s Rural Housing Services programs, which provide approximately 132,000 home loans a year, have been shut down due to absence of continued Federal funding. At the same time, the lack of access to Federal agencies and associated records is hindering the loan approval process for many more

(From LA Times) Housing lenders rely on a variety of government data, such as verification of borrowers’ income, which are unavailable with the partial closure of the Internal Revenue Service and other agencies.

The mortgage industry has found creative ways to work around the shutdown. Banks are getting data from other sources. Sometimes they’re simply taking the risk of making loans without some information.

Nevertheless, the shutdown is delaying loans around the country. And some experts warn that home lending could be much more severely disrupted if the political stalemate in Washington persists much longer.

‘How much momentum are our fragile housing markets going to lose?’ said Debra Still, chief executive of Pulte Mortgage and head of the Mortgage Bankers Assn. ‘The longer we’re shut down, the more it’ll negatively affect housing.’

New Memos from LGC on Cost Allocations and Component Units

Memo #2014-07 (Proper Accounting Treatment for Cost Allocations) seeks to address observed, inappropriate use of transfers between funds to account for cost allocations. Proper methods for showing cost allocations are discussed.

Memo #2014-08 (Operation and Accounting for Discretely Presented Component Units, including Tourism Development Authorities) discusses how to correctly operate and account these types of units within local jurisdictions.

FAQ Available from SOG on E-Verify Requirement

Norma Houston at the School of Government prepared this FAQ on application of the E-Verify Affidavit requirements required of local governments as a result of legislation passed in the General Assembly.

Click Here for Copy of E-Verification Affidavit (PDF) for Distribution to Vendors

Department of Revenue clarifies Impact of Sales Tax Law Changes

(From NCLM) At (last) week’s meeting of the legislative Revenue Laws Study Committee, the Department of Revenue indicated that it was interpreting a tax reform provision expanding the sales tax to cover service contracts differently than had been assumed during the legislative debate on tax reform. In the fiscal note for House Bill 998, this provision was assumed to apply to all service contracts for maintenance and repair of automobiles or personal property subject to sales tax. This expansion, included in HB 998, was expected to generate $1.9 million in new municipal revenue statewide during FY 2013-14 and over $4 million in future years. The Department is interpreting the provision in HB 998 to apply only to service contracts where the retailer selling the contract is the entity that provides the service. This will reduce the number of contracts subject to the sales tax and the amount of revenue to be received by an unknown amount. The Committee will consider recommending a legislative change to make clear that the sales tax should apply to all service contracts, regardless of which entity provides the service. Such a change would not take effect until July 1, 2014, however, so revenue this year will be reduced.

League of Municipalities Releases New Legal Memos

(From NCLM) he North Carolina League of Municipalities’ Legal and Government Affairs teams have prepared a selection of memos providing additional detail on some changes of note that were made during the 2013 Session of the General Assembly. The memos address the following:

NLC Annual Report Shows Improved Fiscal Results for Cities

The National League of Cities’ 28th annual survey of city finance officersreveals an overall picture of a gradually improving economy and improving city fiscal conditions. A majority of city finance officers report that their cities are better able to meet financial needs in 2013 than in 2012.

This is largely a result of slowly improving housing markets and increased consumer spending, which are strengthening local tax bases and economic outlooks in local and regional economies. However, continued high levels of unemployment, uncertainty about federal and state actions, and long-term pension and health benefit obligations continue to constrain the potential for strong economic growth for many cities.

Click Here to Review NLC’s City Fiscal Conditions in 2013 report

What is the Future of Fiscal Federalism?

(From ABFM) Originally, the first plenary session of the 2013 ABFM Conference, held Thursday, was meant to focus on the impact of this year’s Federal Budget sequestration on state governments.

For the panelists and audience, however, the presentations and discussion provided an opportunity to look beyond sequestration and consider other factors impacting the intergovernmental fiscal relations…

Click Here to See the Rest of This Article at

Check out these slides shared during the presentation discussed above by Paul Posner of George Mason University.

How is North Carolina Looking?

Check out these charts from the latest update of economic indicators provided by the Federal Reserve Bank of Richmond

In his latest update to NC’s Leading Economic Indicator Index, NC State’s Mike Walden sees some overall improvement for the Tar Heel State, though much work remains to be done:

The NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC INDICATORS, a forecast of the economy’s direction four to six months ahead, took a strong jump in August, rising 4% from July and almost 8% from the year earlier. All components of the Index improved except for initial jobless claims, which rose 7%. But even initial jobless claims are well down from their recessionary peak, and the other components also were much improved from a year earlier. The Index suggests the state economy is in recovery mode and will continue so. However, this may not translate to large job gains, as this recovery has been marked by much stronger growth in output than in jobs.

Regional Economic Survey Results

From Federal Reserve Bank of Richmond

Where Do Gas Prices Stand?GasBuddy101413


Fuel prices are about 10% below the same time last year, and North Carolina is a few cents below the National Average, though we remain significantly above our neighbors to the south and north (sub-$3/gallon unleaded was spotted at pumps in Virginia this weekend).

Free Course Available on Pension & Retirement Finance

Click Here for More Information & Registration

In this (FREE) eight-week course, you will learn the financial concepts behind sound retirement plan investment and pension fund management. Course participants will become more informed decision makers about their own portfolios, and be equipped to evaluate economic policy discussions that surround public pensions. The course begins with the principles of financial economics, such as the distribution of outcomes when investing in stocks, bonds, or annuities. These serve as the building blocks for an understanding of different retirement strategies that can help you improve your asset allocation. Finally, the course applies these principles to government programs and policies.

The Finance of Retirement and Pensions will culminate in an interactive symposium about the challenges of U.S. pension systems. Held in January 2014 at Stanford Graduate School of Business, the event will feature representatives of the MOOC teams with the five most promising ideas for pension reform, who will present their proposals to a distinguished panel of faculty and experts in finance and public policy. Expenses will be covered by Stanford Graduate School of Business and the Hoover Institution.

(Instructor) Joshua Rauh is a Professor of Finance at the Stanford Graduate School of Business, a Senior Fellow (by courtesy) at the Hoover Institution, and a Research Associate at the National Bureau of Economic Research (NBER). He studies corporate investment and financial structure, private equity and venture capital, and the financial structure of pension funds and their sponsors. Rauh’s research on state and local pension systems in the United States has received national media coverage in outlets such as the Wall Street Journal, New York Times, the Financial Times, and The Economist. Before joining the Stanford faculty in 2012, he taught at the University of Chicago’s Booth School of Business and the Kellogg School of Management.

Lacker Discusses Importance of Human Capital as a Financial Investment

Click Here for Speech Transcript & Additional Information

Highlighted Points

  • Many efforts are aimed at helping students decide how to finance college. But these efforts beg an important question: Is college the right investment for every student
  • On average, the payoff to college is large, but only students who graduate realize high returns on their investment. Currently, the dropout rate is about 50 percent, perhaps because many students do not have an accurate assessment of their own readiness for college.
  • The flipside of the dropout problem is the failure of relatively high-achieving students to apply to college, perhaps because they overestimate the costs of college or underestimate the future payoffs.
  • This suggests that students would benefit from accurate information about the returns to schooling, the level of preparedness that is required to succeed in college and options such as community college, vocational training and apprenticeship programs.
  • In addition, research shows that poor and minority children are much less likely to have access to high-quality early education, which lays the foundation for future academic and labor market success. Greater investments in early interventions could help ensure that children’s future choices about human capital investment aren’t limited by their backgrounds.

Click Here for a Recent Presentation by Jeffrey Lacker on the History of the Federal Reserve

NCLGBA’s Analyst Brief – August 2, 2013

We had a little bit of a break after the summer conference. Check out what we had to share through workshops and other sessions on our conference archive page.

We encourage you to share this report with colleagues.

Final Legislative Updates

LeagueLINC Bulletin (NCLM)

NCACC Legislative Bulletin

Career Opportunities

Finance Officer/Director of General Administration – Wrightsville Beach (Closes Next Friday, 8/9)

Budget & Special Projects Manager – Town of Garner (Open Until Filled)

Financial Operations Manager – Town of Wake Forest (Open Until Filled)

State Budget Post Mortem

Click Here for NCLM’s Summary of FY 13-15 Budget Provisions

Click Here for Summary of Tax Reform Legislation Implementation (Schedule)

Adopted Budget Extends Transitional Hold Harmless Another Year

(Karl Knapp) The General Assembly approved its final version of the State budget (SB 402 Appropriations Act of 2013) this week and sent it to the Governor, who signed it into law this afternoon. Thanks to the efforts of municipal officials and the General Assembly, the budget includes a one-year extension of the Transitional Hold Harmless payment, which expired in August 2012. The 2013 payment would be made in September, and would be calculated as in past years, but each local government would receive only one-half of the amount calculated. There will be no further extension of the Transitional Hold Harmless beyond 2013. The budget contains several other provisions affecting cities and towns, including changes to water and sewer funding and economic development support.


(BEA) 2nd Quarter GDP grew at an annualized rate of 1.7%, higher than most forecasts and the revised 1st Quarter GDP growth rate of 1.1%. Click here to check out analysis summary from PNC Bank.

(BLS/Wells Fargo) US job growth for July (162,000) was short of analyst expectations, with the reported national unemployment rate (7.4%), reaching its lowest level since December 2008, also reflecting the impact of the job growth and a 37,000 reduction in labor force. Average weekly hours worked and hourly earnings declined slightly. Labor force participation dropped to 63.4%, remaining at a level significantly below levels achieved over the past 30 years. Full-time employment (35+ hours) grew by 92,000 in July, showing growth of 172,000 for 2013 so far, though still 1.06 million less than December 2008. Part-time employment has grown by approximately 700,000 since the start of 2013.

(BLS/Wells Fargo) While personal income grew 0.3% in June, personal spending grew 0.5%.The personal saving rate declined to 4.4%.

(BLS/NCESC) North Carolina’s Unemployment Rate for June remained at 8.8%, despite the loss of 10,958 jobs compared to May (likely due to summer job shifts). Labor force also declined by 10,362. Had the labor force remained constant with May, the unemployment rate for June would have been 9.05%.

(NC Comptroller) May 2013 report showed FY12-13 tax revenues increasing 5.4% compared to last year. Personal income tax revenues are up 7.2% and corporate income taxes are up 6.3%, while state sales tax revenues are only up 0.3% for the year. Click here for the Comptroller’s Monthly Report


(NCSU) Mike Walden’s North Carolina Index of Leading Economic Indicators remained unchanged in June, though is still 2.7% compared to a year ago. Significant drops in construction activity (Building Permits) offset improvement in other areas (Unemployment Claims, work hours, employee earnings).

(WellsFargo) New orders grew 1.5% in June, nearly reaching the $500 billion mark and achieving an all-time high and marking continuation of levels over the past couple months that recovered above pre-recession levels.

(WellsFargo/Richmond Fed) June saw significant improvement in the ISM national production and new orders indices, reflecting continued expansion in the manufacturing sector. Click here for more information. For the Mid-Atlantic, including North Carolina, the index did improve in June, though declined significantly in July to -11, driven by lower capacity utilization and reduce order backlog, along with increased inventories in finished goods and raw materials. Regional employment in the sector was flat. Expectations for the remainder of 2013, however, grew and remain stronger than current conditions. Click here for the Richmond Fed District report.

(WellsFargo) Construction spending did fall less than 1% in June, consistent with other observations of an unexpected early summer slowdown. Revised information for earlier months point to a stronger spring. Click here for more information.

Economic Updates

Dr. Woody Hall’s updated presentation from the summer conference is now available (click here). You can also check out his presentation from last week’s NCLGIA Conference in the embed below:

Wells Fargo’s Outlook Videocast for July focused on current conditions and continued domestic recovery:

What’s Up with Gas Prices?



Crude Oil prices have surged up 25% compared to last summer. How is impacting retail prices?



Nationally, gas prices are a couple percent higher right now than they were a year ago. North Carolina prices, while increasing significantly compared to earlier this summer, are on par with last summer.

Still, the significant mid-summer increase does have an impact.

From FuelFix:

Gasoline prices jumped 14 cents per gallon in July, making this the third most expensive summer driving season so far, according to AAA.

The average national pump price took drivers on a roller-coaster ride during the month, surging 20 cents from the summer’s lowest gas price so far on July 7 ($3.47 per gallon) to the summer’s highest on July 19 ($3.67). In total, the average gasoline price grew 3.9 percent during the month, from $3.49 to $3.63.

Overall, it was the largest monthly increase since February.

“July was a volatile month for consumers with gas prices reeling from the lowest to the highest averages seen in months.” said Avery Ash, AAA spokesman. “A combination of expensive crude oil costs, refinery glitches and rising summer demand resulted in sharp price spikes for many motorists.”

For the entire month, gasoline averaged $3.58 per gallon, 16 cents higher than last July. Still, the month was less costly for drivers than July 2008 and July 2011, when gasoline averaged $4.06 and $3.65 respectively, according to AAA.

Those also were the years with the most expensive average summer gas prices. The average gas price so far this summer is $3.59 per gallon, compared to $4.04 during the same period in 2008 and $3.67 in 2011.

West Texas Intermediate crude oil hit a 16-month high of $108.05 per barrel on July 19. Crude prices account for about two-thirds of consumer gasoline prices, according to AAA.

“Millions of Americans take long road trips in August and any unexpected production problems can result in serious supply and demand issues,” continued Ash. “We often see refinery problems and major hurricanes drive up prices this time of year, which means motorists could be in for a rough time at the pump in the coming weeks if something goes wrong.”

The direction of gas prices for the rest of the summer driving season, which extends from Memorial Day (May 27) to Labor Day (Sept. 2), largely will depend on weather and refinery performance, AAA noted. Prices were hit hard in August 2012, when Hurricane Isaac temporarily took several refineries out of operation, causing gas prices to surge 33 cents over the month.

Today, a gallon of regular gasoline averages $3.63 per gallon, 13 cents higher than a year ago. Houston drivers are paying an average of $3.51, up 16 cents from a year ago.

News Notes

(AP/MSNBC) Four of Five Americans live in danger of falling into poverty

(Denver Business Journal) Ford launching CNG-powered F150

(Harvard) Intergenerational Mobility Varies by Region

(TBJ) Want to climb the income ladder? Get out of Raleigh

(NewGeorgraphy) E-Shopping Bubbling While Retail Bums Along

(NewGeography) Raleigh ranked in Top 5 of “Most Aspirational” Cities

Of Interest in History Today

On this day, 90 years ago, Calvin Coolidge was sworn in as the 30th President of the United States following the untimely death of the 29th President, Warren Harding.

Coolidge was vacationing with his parents at their home in Vermont. His father, a Notary Public, administered the Oath of Office in their living room.

From President Coolidge’s own account:

On the night of August 2, 1923, I was awakened by my father coming up the stairs, calling my name. I noticed that his voice trembled. As the only times I had ever observed that before were when death had visited our family, I knew that something of the gravest nature had occurred.

He placed in my hands an official report and told me that President Harding had just passed away. My wife and I at once dressed.

Before leaving the room I knelt down and, with the same prayer with which I have since approached the altar of the church, asked God to bless the American people and give me power to serve them.

My first thought was to express my sympathy for those who had been bereaved and after that was done to attempt to reassure the country with the knowledge that I proposed no sweeping displacement of the men then in office and that there were to be no violent changes in the administration of affairs. As soon as I had dispatched a telegram to Mrs. Harding, I therefore issued a short public statement declaratory of that purpose.

Meantime I had been examining the Constitution to determine what might be necessary for qualifying by taking the oath of office. It is not clear that any additional oath is required beyond what is taken by the vice president when he is sworn into office. It is the same form as that taken by the president.

Having found this form in the Constitution, I had it set up on the typewriter, and the oath was administered by my father in his capacity as a notary public, an office he had held for a great many years.

The oath was taken in what we always called the sitting room, by the light of the kerosene lamp, which was the most modern form of lighting that had then reached the neighborhood. The Bible which had belonged to my mother lay on the table at my hand. It was not officially used, as it is not the practice in Vermont or Massachusetts to use a Bible in connection with the administration of an oath.

Besides my father and myself, there were present my wife, Senator Dale, who happened to be stopping a few miles away, my stenographer, and my chauffeur.


Analysis Roundup for January 4, 2013

Happy New Year!

Unemployment Rate Rises Across Most of NC in November

81 of North Carolina’s 100 counties saw their unemployment rates increase in November, according to analysis released Thursday by the NC Department of Commerce’s Division of Employment Security.

43 North Carolina counties still have unemployment rates of 10% or greater going into the end of the year. Overall, the state lost a little more than 22,000 jobs in November.

Click Here for the full analysis.

Click Here for WRAL’s interactive unemployment rate map

National December Employment Holds Trend

Wells Fargo Economics Group offered this short and sweet summary in their assessment of December’s national employment numbers, which saw the seasonally-adjusted rate go to 7.8%, consistent with the revised rate for November.

Job gains have averaged 151,000 over the past three months and 153,000 in both 2011 and 2012. Over the past three months, unemployment and participation have averaged 7.8 percent and 63.7 percent, respectively. So, is this it?

Be Prepared for Tax Reform

Based on remarks made by Governor-Elect Pat McCrory during his appearance Wednesday at the 2013 NC Economic Forecast Forum, it appears that significant tax reform is on the agenda for North Carolina’s Governor and General Assembly in the coming months.

The appointment of Art Pope as Deputy Budget Director likely means the Governor-Elect and General Assembly will work within a framework where the State Personal and Corporate Income Tax would be reduced or eliminated in favor of broad, consumption-based taxation. These and other ideas, including eliminating the Franchise Tax, were discussed during the preliminary session of the Forum by a group of financial panelists, including Wells Fargo Economist and Winter 2012 Conference presenter Michael Brown.

The Governor-Elect’s remarks also included discussion of other pertinent issues, including health care exchanges and the State’s unemployment insurance debt.

The Governor-Elect formally takes office this weekend.

Here is a video of McCrory’s complete remarks at the Forum.

Forecasters Little Less Optimistic About 2013 Economy

Wednesday’s 2013 NC Economic Forecast Forum, sponsored by the NC Chamber of Commerce and NC Banker’s Association, included presentations by noted financial analysts and economists on the current and upcoming state of the state, national and global economies. Overall, their assessments were not as “rosy” as those offered this week by NC State University economists Michael Walden.

You can check out video of these presentations below, starting with UNC-Charlotte Economists John Connaughton.

Click on the links below for copies of the presentations made during the Forum.

Connaughton – 2013 Babson Capital/UNC Charlotte Economic Forecast

Carroll – Our Economy in 2013: Investors… Forge Ahead or Duck and Run?

Brown – North Carolina: Tax Reform In A New Growth Environment

Lindholm – Effective State Tax Reform: Encouraging Jobs and Investment

Richmond Fed’s Lacker offers 2013 Outlook

Jeffrey Lacker, President of the Richmond District of the Federal Reserve and lone opposing vote on recent votes to continue the Fed’s policy of quantitative easing, delivered his outlook for 2013 during the Maryland Bankers Association’s Sixth Annual First Friday Economic Outlook Forum in Baltimore.

Click here for highlights from the outlook speech

Governor-Elect McCrory Announces Cabinet

Prior to the start of the New Year, Governor-Elect Pat McCrory made a few announcements regarding his initial appoints to his Cabinet. Yesterday, he rounded out his leadership team with several additions.

The McCrory leadership team taking over the State next week looks like this (information courtesy NC Metro Mayors Coalition):

NCDOT- Tony Tata (former Wake County school superintendent, retired military)

Commerce- Sharon Decker (former VP, Duke Energy)

Administration- Bill Daughtridge (former State Rep. from Rocky Mount)

Cultural Resources- Susan Kluttz (former Salisbury Mayor)

Public Safety- Kieran Shanahan (Attorney, former Federal Prosecutor)

DHHS- Aldona Wos (Doctor, former Ambassador)

DENR- John Skvarla (Attorney)

Revenue- Lyons Gray (Former Legislator)

Budget director- Art Pope (Former Legislator)

Office of State Personnel-  Neil Alexander

Chief of Staff- Thomas Stith (Former Durham Councilmember)

Chief Legal Counsel- Bob Stephens

Communications Director- Chris Walker

The most surprising is perhaps that of Tata to head NCDOT. A military veteran and former DC Schools executive, Tata was hired as Superintendent of Schools for Wake County in 2010, but was fired last year following local elections that saw the political makeup of the School Board change party majorities from Republican to Democrat.

Congress & President Avert Fiscal Cliff Policies, for Now

Tuesday, Congress and the President run in the New Year with a deal that averted implementation of several tax and spending policies known together as the “fiscal cliff.” While the potential for significant tax increases and federal spending cuts would have likely had a profound immediate negative impact on the national economy, the compromise plan that delayed almost all spending cuts in exchange for increases in top marginal tax rates on income and capital gains for households earning more than $450,000 per year did very little to address systemic issues facing the Federal fiscal condition.

Click Here for a Comprehensive Overview (via ABFM)

Applications being accepted for GFOA Scholarships

Applications are now being accepted for various academic scholarships offered through the Government Finance Officers Association for undergraduate and graduate study in public administration and government finance.

The application deadline for each of the four scholarships being offered is February 22, 2013. Recipients will be announced on April 30, 2013, and invited to be recognized for their awards during the GFOA Annual Conference in San Francisco, June 2nd-5th.

Click Here for GFOA Scholarship Information (via ABFM)

Links of Interest

The Productivity-Crushing Power of “Reply to All” (WSJ-At Work)

Want that Promotion? Practice Your Job (WSJ-At Work)

Ten Resolutions the Most Successful People Make and Keep (Forbes)

Duke Energy, Progress fire up New Power Plants (CBJ)

Unclear whether live marsupial used at Possum Drop (WRAL/AP)

UNC-Chapel Hill is top value in Kiplinger’s ranking (WRAL)

Nortel Networks closes up, settles with retirees (TBJ)

NC Real Estate & Demographic Information (Neighborhood Scout)

January 4th League LINC (NCLM)

NC Furniture Maker Hailed as US Job Creator Closed (WRAL)

Analysis Roundup for September 7, 2012

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

NC State
Walden’s Leading Economic Indicator Index remains flat for August

Dr. Walden’s August Update of Leading Economic Indicators for North Carolina fell a slight 0.1% compared to July. This also happened to be the year-to-year rate of decline.

Initial jobless claims and manufacturing job hours and earnings for North Carolina workers all declined, offsetting gains seen in construction permits. The index also countered national leading indicators, which increased 0.7% for the month.

The state economy is essentially “treading water”, with no clear direction up or down.  The manufacturing sector has certainly slowed, but residential housing is showing some promising signs. Investors may be waiting for clearer signs from the upcoming election results.

Bureau of Labor Statistics
US Unemployment Rate drops to 8.1% because of some job growth, more labor pool decline

The seasonally-adjusted national unemployment rate for August was 8.1%, according to this morning’s report from the Labor Department’s Bureau of Labor Statistics. They report a 96,000 increase in total nonfarm employment for the month, moving the monthly average for 2012 to 139,000 (down from 153,000/month in 2011).

Including agricultural employment, total employment declined by 119,000 jobs in August to 142.1 million.

The total labor force contracted by 368,000 (seasonally-adjusted) reducing the participate rate to 63.5%. This is the lowest percentage since September 1981.

Private-sector employment grew overall nationally by 103,000 jobs, all of it due to service sector growth (+119,000). Goods-producing industries lost 16,000, with manufacturing (major component to North Carolina workforce activity) declining by 15,000.

Wells Fargo Economics Group’s analysis this morning of the report reaffirms their belief that overall national economic growth will remain below 2% for the rest of 2012.

An RBC economist also offered this assessment of how today’s employment report might influence action in the coming week from the Federal Reserve.

To help generate even greater job gains, the Fed is expected to keep policy highly accommodative. Fed Chairman Bernanke in hisJackson Hole speech last week signalled a preparedness to introduce additional ease if conditions warranted. Thus, next week’s Federal Open Market Committee (FOMC) could see the central bank extending the forward guidance (as to the maintenance of the current range for fed funds) to “sometime in 2015” from the reference to “late 2014” as indicated following the last FOMC in August. The disappointing August job gain will likely prompt discussion at the FOMC about the need for another round of asset purchases.

Richmond District – Federal Reserve
What do you know, and not know, about migration?

The Richmond Fed’s Region Focus is a quarterly publication highlighting their research on various economic and statistical topics. Their latest issue (published this week) includes an interesting article on residential migration, an activity that often dramatically-impacts local government operations and finances.

While the article is written from the premise of trying to figure out if common arguments for recent decline in migration (underwater mortgages, telecommuting, etc.) are relevant with respect to actual data, the work really is a more effective means of understanding some common characteristics associated with migration and the demographic variables that influence its growth or decline, especially at the local level.

The latest Region Focus also includes two more great articles of interest to local governments. Their cover story focuses on the factors contributing to the declining size of our national labor force. They also include a short feature on the concept of “Charter Cities” and the recent establishment of them in Honduras.

Click here for all of the content from the latest Region Focus.


Wells Fargo Economics Group
Chartbook: How does commercial real estate factor into all of this?

The commercial real estate market did not see as much valuation volatility as the housing market did during and after the economic crisis in 2008 caused in part by the proliferation of risky mortgage-backed securities. However, the commercial property market could still pose a threat, and would have possibly over the last couple years if not for the Federal Reserve’s two prior rounds of quantitative easing. The latest commercial property chart book from Wells Fargo offers some background on the subject, which may be of interest to cities with high levels of commercial property.

The huge mountain of commercial real estate loans maturing around the middle of the decade has been one of the motivating forces behind the Fed’s monetary policy strategy, which has driven long-term interest rates down to historic lows and removed
much of the near-term interest rate risk. Lower interest rates have also made it possible to refinance and restructure a larger proportion of maturing and potentially problematic loans maturing later in the decade. Moreover, the drop in Treasury yields has also pushed liquidity into other areas, including stocks and real estate. Furthermore, higher stock market valuations have allowed insurance companies and pension funds to allocate a larger portion of their investment portfolio to real estate. A healthier equity market has also made it easier for REITS to raise funds.

However, investors should remember that all magic comes with a price. Ben Bernanke outlined what he believed the costs of the Fed’s asset purchase program have been and by his account they have been manageable. The yield curve has narrowed and inflation premiums, as measured by TIPS, have remained relatively low. This analysis misses one key point, which is the large increase in the demand for liquidity arising from the uncertainty surrounding the Fed’s unprecedented policy moves. Investors’ increased preference for liquidity has manifested in a number of ways, including significantly higher prices for assets with more certain cash flows. No cash flow is more certain than Treasuries, which means the Fed’s measure of potential costs may be flawed.

The drive for liquidity is also affecting commercial real estate. Demand has soared for well-located properties with strong tenants in deep, liquid markets like New York and San Francisco. While that sounds perfectly logical, it means that the most significant gains in commercial real estate values have been limited to a relative handful of projects in a small number of markets.

In other words, while the commercial real estate sector may seem somewhat healthy, it could be thrown into turmoil very easily. Future Federal Reserve policy, especially in light of sluggish overall economic growth and employment activity, could have profound impact.


Fuel Update

Crude oil prices remained between $94-$98/bbl for the week after Labor Day, and average North Carolina prices for regular unleaded stayed at or close to the $3.80/gallon mark influenced prior to the holiday by summer driving, rising corn prices and storm activity in the Gulf of Mexico.

Corn prices remain a concern with respect to their impact on ethanol.They are below highs experienced in mid-to-late August, but still at an oppressive price in trading.


Continued crop export growth expected for 2013

US Secretary of Agriculture Tom Vilsack expressed optimism following release of future export estimates should remain above and near record levels set in the recent past.

This year, total farm exports are expected to reach $136.5 billion, close to a record level set last year. The record is expected to be set again in 2013, when exports are projected to reach $143.5 billion.

Export value growth has been 50% since 2009, influenced by increased demand from developing countries along with higher food prices.

Analysis Roundup for August 29, 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:

Bureau of Economic Analysis
US GDP Growth Slows Down in 2nd Quarter to 1.7%

Today’s report on GDP performance for the 2nd Quarter of 2012, a benchmark for general direction of the overall national economy, reflected concerns expressed by economists of the past several months of a slowing condition. US Real GDP (indexed for inflation) grew at an annual rate of 1.7% for the last quarter. This is less than the 1.9% growth achieved in the 1st Quarter.

Economists predicted GDP growth would reside between 1.5% and 2%. This snipped from today’s BEA Press Release provides an explanation of the factors contributing to recent performance:

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed  investment, and residential fixed investment that were partly offset by negative contributions from private inventory investment and from state and local government spending. Imports, which are a subtraction in the calculation of GDP,

AAA Carolinas/Gas Buddy
Late Summer Gas Price Spike Exacerbated by Hurricane Issac

Late spring and early summer saw a significant drop in crude oil, gasoline and diesel prices from winter and early spring highs, with prices falling about 30% between March and early July.

Unfortunately, fuel-oriented energy prices rebounded from mid-July through August, with gasoline prices increasing at a rate faster than crude and diesel because of the impact of high corn prices due to the use of Ethanol.

Now, anticipated supply disruptions created by the arrival of Hurricane Issac along the gulf coast of Louisiana and Texas is forcing additional price spikes. Today’s daily price report from AAA indicates that the national average increased 1.3% for regular unleaded compared to yesterday, with North Carolina metropolitan areas now at or close to the national average of $3.80/Gallon.

According to this comparative chart from Gas Buddy, North Carolina retail prices for regular unleaded have steadily returned upward to the national average in the second half of the summer.

While the neighboring state of South Carolina has seen price increases as well, they remain significantly below the national average. Over the long run, supply problems can force more localities to see prices move toward the national average, even with their traditional location “discount” and/or lower tax rates.

Source: AAA, 8/29/2012

Bureau of Labor Statistics
NC Metro Nonfarm Employment Falls, Overall Employment Rises for July

Toward the end of each month (or a week or so into the start of the next month), the Bureau of Labor Statistics (along with the North Carolina Department of Commerce Division of Employment Security, a.k.a. ESC) publish employment statistics for metropolitan areas (MSAs). For July, each of North Carolina’s 14 Metropolitan Areas saw an expected decline in nonfarm payroll, and indication of softening conditions this summer with some impact resulting from public sector contraction.

Overall, the State lost 75,200 nonfarm payroll positions in July, though overall employment for the month did increase by 12,900 compared to June as a result of seasonal hires in the agriculture sector. Nine MSAs in North Carolina also saw net job growth in July, with the biggest spike witnessed in the Raleigh-Cary MSA (+8,300).

All but 2 metropolitan areas in North Carolina (Wilmington and Winston-Salem) have seen positive growth in nonfarm payrolls compared to a year ago.

MSA unemployment rates for July range from a low of 7.7% (Asheville) and 7.9% (Raleigh) to a high of 13.1% (Rocky Mount). Eight MSAs had rates higher than the statewide rate of 9.8%.

Richmond Federal Reserve Bank
Nearly 17K Private Sector Jobs Gained in NC in June

The Richmond Fed produces a narrative “Regional Update” of employment conditions of each within their District on a monthly basis, providing additional perspective on monthly employment statistics distributed the third Friday of each month by the Bureau of Labor Statistics. Here is the text of their latest update from today on North Carolina’s job picture:

Labor market indicators for North Carolina were generally mixed in July, but the underlying employment data were encouraging. Private sector payrolls swelled even as the state’s unemployment rate rose. However, the results from our Carolinas Survey of Business Activity for July were disappointing, as more respondents reported that business activity had slowed and labor demand had softened.

North Carolina’s total payroll employment (seasonally adjusted) increased by 1,800 in July — its second monthly increase in a row. However, the relatively small gain in total payrolls belies a much bigger improvement in the private sector. Private sector firms added 16,600 net new jobs to payrolls and the gains were very widespread. Leisure and hospitality employment jumped by 5,900 in July, which reversed all of the losses that the industry had experienced in the first half of the year. In fact, employment in leisure and hospitality stood at its highest level since March 2008. Manufacturing also showed an impressive increase in July, rising by 3,400 jobs. Private education and health services jobs bounced back last month from a rare decline in June. The professional and business services and the other services categories also increased notably during July. The remaining major private sector industries saw more modest gains.

The big drag on North Carolina’s payroll employment during July was the public sector, especially local governments. After trending up between July 2011 and June 2012, local government employment dropped by 14,500 last month, accounting for all of the public sector job losses. State and federal government employment was largely unchanged. Over the year, private sector payrolls were up 42,500 in North Carolina, while government employment was off by 6,600 jobs.

Looking across North Carolina, the data varied widely. Eight of the state’s 14 metropolitan statistical areas (MSAs) showed month-to-month increases in employment, with the largest occurring in the Triangle area (the combination of the Raleigh and Durham MSAs). The Greensboro-High Point MSA was not far behind, with an increase in employment of 2,700 in July. Asheville, Burlington, Greenville, Jacksonville, and Rocky Mount experienced more modest increases. By contrast, the Charlotte MSA lost about 3,000 jobs during July and total employment in the area is off by 5,400 since April. The Winston-Salem MSA also experienced substantial jobs losses in July.

North Carolina’s unemployment rate, which is based on a different survey than the payroll employment estimates, increased for the first time in a year. After coming in at 9.4 percent for three straight months, the state’s seasonally adjusted unemployment rate increased 0.2 percentage point in July to 9.6 percent. The ranks of unemployed workers swelled by a little more than 5,300 workers, even as labor force participation in the Tar Heel state continued to move lower — a trend which started in March. Our Carolinas business activity index dropped into negative territory in July for the first time since last fall. Moreover, the deterioration in current general business conditions was accompanied by continued softness in current labor demand indicators.

Economic Reports Available for Charlotte & Raleigh Metro Areas

PNC, like other national banks, has an economics division that evaluates and provides research and analysis on national and global economic conditions. PNC also prepares quarterly economic updates on a regional basis for the markets they serve across the United States. A consolidated regional report includes link to metro area reports, including new ones they’ve added to cover their expanded markets in Charlotte and Raleigh as a result of their recent acquisition of RBC Bank.

Click Here for their most recent Regional Outlook

Click Here for their most recent Charlotte Market Outlook

Click Here for their most recent Raleigh Market Outlook

Click Here for their most recent National Economic Outlook Report (Monthly)

Replay information on their economic outlook conference call held August 23rd will be made available as soon as it is posted.

Analysis Roundup for August 17, 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:

Click Here for Information on Next Week’s PNC Financial Economic Update Conference Call
(Thursday, August 23rd, 2pm ET)


Bureau of Labor Statistics (BLS)
NC, Most States see Unemployment Rise in July

North Carolina’s seasonally-adjusted unemployment rate rose from 9.4% in June to 9.6% in July, making it one of 44 states to see an increase in their unemployment rate for the month.  The Tar Heel State is now tied for the 6th-highest rate (with South Carolina) among states in the US.

Compared to last year, the size of North Carolina’s labor force is pretty stagnant (4.647 million), though it did decrease by 8,400 in the past month. The number of “unemployment” increased by 5,300.

The unadjusted unemployment rate did drop a little from 9.9% to 9.8%, reflecting an increase in summer work. Unadjusted total nonfarm employment experienced a decline of 75,200, a share of the workforce (1.9%) in line with prior performance (2.0% July dropoff last year).

Seasonally adjusted nonfarm employment saw a net increase of 1,800 in July, indicating some improvement in North Carolina’s job market. Strongest sectors of

Wells Fargo Securities
July Leading Indicators Improve, Recession Not Likely

The Conference Board’s Leading Economic Index (LEI) rose 0.4% in July, with growth also reported in coincident and lagging indicators. July also saw increases in building permits and orders for nondefense capital goods, with industrial production remaining at least 4% higher than last year. Consumer confidence, however, continues to decline.

Consumers not embracing Back-to-School Spending

Retail sales taxes are heavily-influenced by families buying for back-to-school, even in an environment where “Sales Tax Holiday” weekends often distort buying patterns. While trade experts anticipate double-digit growth in sales for the season this year, reporter interaction with shoppers indicates they are doing their best to stay within last year’s budgets.

Wells Fargo Securities
Prices Up, Consumer Spending Up

Typically, the Bureau of Labor Statistics (BLS) releases its consumer spending report in conjunction with the Producer Price Index (PPI) for each preceding month, followed a day later by the Consumer Price Index (CPI) report. For July, the PPI increased 0.3%, and “finished” goods increased 0.2%. This was driven primarily by continued significant increases in prices for foodstuffs (+5.2%).

On the consumer side, the CPI for July remained flat compared to June, with the annual rate dropping below 2%. Consumer inflation is driven in large part due to food and energy prices, which are influenced by both producer prices and demand. The CPI for food has increased an annual rate of 2.6% over the past 3 months.

Erskine Bowles Talked About Much More than Paul Ryan

Earlier this week, viral video surfaced of former UNC Chancellor and Deficit Reduction Commission Co-Chair Erskine Bowles expressing compliments of U.S. House Budget Committee Chair (and Mitt Romney’s Vice-Presidential running mate) Paul Ryan. While media have focused on the meaning of this passive “endorsement” of Ryan’s personal capabilities and commitment to reducing the size of the annual Federal budget deficit (not necessarily his policy proposals), the entire speech made by Bowles last September during this UNC Lambeth Lecture is very insightful and worth a look.

In the course of an hour, Bowles provides a convincing case from multiple perspectives for deficit reduction, as well as outlines the vision and values that guided the Deficit Commission’s efforts.

NCLGBA Blog/Wells Fargo Securities
Vitner suggests US Economy growing “slower,” but not “close to the edge” for recession

Check out this August Outlook video, featuring Wells Fargo Economist Mark Vitner.

New York Federal Reserve
How did Banking and Prison Shape O. Henry?

At the New York Fed’s “Liberty Street Economic Blog, you can learn about the early life of famous American writer O. Henry and how his failures as a bank teller, eventually leading him to serving time in jail, helped him focus attention on his now-renowned life’s work.


Chart of Note: Consistent Look at Unemployment

Chart of Note: Consistent Look at Unemployment

By Kenneth Hunter

NOTE: The following represents the analysis-based opinion of the author and do not reflect those of his employer or any other affiliations

Last August, I wrote up a post for the ASPA Blog that looked at North Carolina’s published unemployment rate and critically-compared it to how it would look if labor participation was kept constant, rather than fluctuated on a monthly basis. As the graph below from that report showed, unemployment rates would be significantly higher if participation was locked-in at a long-term, pre-recession average for the State (72.5%).

Click here for link to alternative posting of the ASPA post

This week, the impressive news site Business Insider featured a similar graph that compared “published” national unemployment with an alternative rate, utilizing a constant national labor participation rate (67%). In light of the substantial decline in labor participation incorporated into January 2011 unemployment statistics reported by the BLS last week, the graph below is a pretty telling indicator of how uncertain we are when it comes to the health of the market and the overall economy.

Graph developed by Albert Edwards of Societe Generale

The 67% participation rate reflects labor involvement in 2000, as well as its long-term average prior to the recession. From a comparative perspective, labor force participation in the early-1960’s was a little over 50%, reflecting societal and workplace norms and practices of the time.

While we do not know if a constant participation rate will be incorporated into long-term changes to the calculating and reporting of critical statistics, the alternative look does provide us with a chance to seriously evaluate and consider what is “real” when it comes to the state of our national, state and local economies.

What NC Economists are Saying

What NC Economists are Saying

Three of the better-known economists in North Carolina commented on the current state of the economy late this week, in anticipation and response to today’s BLS unemployment report for August. Here is a sample what they posted on the LocalTechWire blog:

Dr. Michael Unger, director of the Philosophy, Politics, and Economics Program at Duke University, offers some historic insight into the period some are trying to compare the present to, the mid-1930’s.

Dr. Michael Walden, William Neal Reynolds Distinguished Professor for the Department of Agricultural and Resource Economics at North Carolina State University, suggests the recent growth is slowing down considerably.

Finally, Dr. James Kleckley, director of the Bureau of Business Research in the College of Business at East Carolina University, focuses his attention on the job front, and how its lack of growth is an even bigger issue than the economy as a whole.