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Economy to slowly recover, says economist
Photo by Jonathan E. Coleman
Lt. Gov. Walter Dalton was in Concord on Tuesday to discuss with area leaders where the community stands in regards to moving past the current recession. Dalton spoke at the State of the Region event held at Concord Mills.
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Published: November 10, 2009
CONCORD - The recession that began in late 2007 has ended, but the recovery will be much longer than past recessions, Charlotte Federal Reserve Bank regional economist Rick Kaglic told local business leaders Tuesday morning.
"Just because we have hit bottom after we fell off a very high ledge, doesn't mean we're back," Kaglic said about the recession. "The economy is still very weak."
The Cabarrus Regional Chamber of Commerce met early Tuesday at the Concord Mills AMC 24 for the State of the Region Summit, featuring presentations by Lt. Gov. Walter Dalton and N.C. Sen. Ruth
Samuelson. The mayors of Concord, Kannapolis, Mount Pleasant, Harrisburg and Midland and
Commission Chairman Jay White also participated in a panel discussion about the local economy.
A global economic crisis ensued after Lehman Brothers filed for Chapter 11 bankruptcy protection in September 2008, leading to a loss of investor confidence, increased borrowing rates for the federal government and corporations and a freefall in consumer spending toward the end of 2008, Kaglic said.
More recently, unemployment reached more than 10 percent nationally. North Carolina reported a 10.8 percent unemployment rate for September, which is down from previous months when it climbed as high as 11.1 percent, according to a report released by the N.C. Employment Commission in mid-October. Cabarrus County unemployment was 11.4 percent in September while Rowan County reported 12.8 percent unemployment.
Measures taken by the federal government to restore confidence in the investment markets and spur consumer spending have helped stave off what could have been a much worse economic decline, Kaglic said.
The Dow Jones lost 54 percent of its value last year.
"It lost 55 percent in the beginning of the Great Depression," Kaglic said. "We have turned around considerably here."
Kaglic said the gross national product indicated that the economy actually expanded in the third quarter of this year. That's a good indication that the recession is over, Kaglic said.
Manufacturing and the housing industry were hardest hit by the recession, Kaglic said, but they too have shown signs of improvement.
But the recovery will be slow, he said.
"The recovery from this recession is going to be a fairly weak one. That is because there still are considerable headwinds facing everyone," Kaglic said.
One of those is employment. The United States has lost 7 million jobs in this recession. One positive note is that temporary help employment has shown a modest improvement in the last few months.
"If you take a look at the temporary help employment, those numbers tend to lead an increase in total employment by about six months," Kaglic said.
But it will be a long road until full consumer confidence and spending is restored as many Americans rebuild their bank accounts, retirement savings and look for work, Kaglic said.
Dalton and Samuelson spoke to the chamber members about state's efforts to flatten the tax system with the goal of lowering state income tax and sales tax. The change will require creating new taxes on services that don't exist now.
Samuelson challenged chamber members to learn all they can about the discussion and tell legislators how proposed changes to the North Carolina taxing system will affect their industries and businesses.
Dalton said another challenge to North Carolina is the rapidly changing global economy and demands on the American workforce. For example, he said, already the state has lost jobs to other developing nations. Emphasis on education will be crucial for North Carolina to compete.
"More students in Beijing, China, took the SAT last year than all of the United States. More students in Beijing took the SAT in English than took the SAT in all of the United States," Dalton said.
Knowledge is rapidly escalating as a commodity, he said.
"With a knowledge-based economy, more people will be working from home," he said. "The pyramid has changed in corporate America. You will see more horizontal networking."
North Carolina needs to continue to develop its economy by looking for opportunities for innovation, Dalton said, citing the N.C. Research Campus in Kannapolis as an example of what needs to happen across the state.
Commissioner Jay White echoed Dalton's statements about education.
"We could have the jobs and the businesses, but if we do not have an educated workforce, we are not going to be able to attract the businesses we want to attract," he said. "Our kids need to understand that it's a 14-year process minimum. They don't stop at high school. They can stop at the community college level."
• Contact Karen Cimino Wilson: 704-789-9141.
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