Explore the latest economic trends in our region Get the latest on economic trends at the local, state and national level from Professor of Banking and Economist for the North Carolina Bankers Association, Harry Davis, PhD. What is your assessment of our local economy? Speaker: Harry Davis, PhD Dr. Harry M. Davis is the Professor of Banking (1980) and Economist (1981) for the North Carolina Bankers Association. He is professor of Finance and past Chair of the Department of Finance, Banking, and Insurance at Appalachian State University (1981-1998). As the North Carolina Bankers Association Economist, Dr. Davis puts together quarterly economic forecasts that are carried by various news outlets. Dr. Davis is frequently interviewed throughout the year by newspapers, television, and radio stations for stories on the economy and banking. Dr. Davis is a frequent speaker at state, regional and national banking conventions on economic and banking issues. This year, we are excited to welcome members of the Carolinas Association of Chamber of Commerce Executives (CACCE) to the Briefing as our special guests. The Chapel Hill-Carrboro Chamber of Commerce was chosen to host the CACCE 2016 Annual Management Conference. Over 100 Chamber executives will be in attendance at the breakfast briefing to get the latest on economic forecasts.

1. On behalf of our Major Investors
and Briefing Sponsors, welcome!

2. Anthony Pugliese
Chair
Chapel Hill-Carrboro Chamber of Commerce

3. Join the Conversation
@carolinachamber
#EOB2016

4. Thank you, briefing sponsors!

5. Our Presenting Sponsor

6. Our Keynote Sponsor

7. Our Q & A Sponsor

8. Our Economic Forecast
Sponsor

9. Thank you to our 2016 Major Investors!
Community Champions

10. Thank you to our 2016 Major Investors!
Community Investors

11. Thank you to our 2016 Major Investors!
Platinum Sponsors

12. Thank you to our 2016 Major Investors!
Platinum Sponsors

13. Thank you to our 2016 Major Investors!
Gold Sponsors

14. Thank you to our 2016 Major Investors!
Gold Sponsors

15. Thank you to our 2016 Major Investors!
Gold Sponsors

16. Thomas Miller
Senior Vice President, Private Financial Advisor at
SunTrust Investment Services, Inc.

17. Our Presenting Sponsor

18. Aaron Nelson
President & CEO
Chapel Hill-Carrboro Chamber of Commerce

19. Our Economic Forecast
Sponsor

20. Our Keynote Sponsor

21. Dr. Harry Davis
Professor of Banking, Appalachian State University
Economist, North Carolina Bankers Association

22. Presented by
Harry M. Davis, Ph.D
davishm@appstate.edu
NCBA Professor of Banking and Economist
Appalachian State University
October 20, 2016

23. The U.S. Economy
 Recovery was 7 years old in June
 This expansion is now the 4th longest in the post WWII
period at 87 months in October 2016
 GDP growth was 2.4% for 2015
 GDP growth slowed to 0.8% and 1.4% for the first two
quarters of this year, respectively

24. The U.S. Economy
 This recovery is the slowest in the post WWII period
 Economic growth has been very slow but employment
growth has been relatively strong in this recovery. Why?
 In this expansion, productivity growth has been the slowest
in 60 years

25. The U.S. Economy
 Productivity has been negative 3 consecutive quarters
through the 3rd quarter of 2016 – last time this
occurred was in 1979
 Business Investment has been anemic in this
expansion

27. Demographics and Productivity
 Retirements are reducing the labor force participation rate
 A new study found retirement lower productivity due to lost
experience
 Output per hour drops with younger inexperienced workers
 Experience peaks at 50 years of age
 We need to raise the retirement age and use tax incentives to
keep people in the labor force longer

29. Consumers
 Both the real personal income and consumer spending rates
of growth have increased to almost 3% in the last 12 months
as opposed to annual rates of approximately 2-2.5%
 Real median household income has now risen to nearly the
level it was 8 years ago

31. U.S. Economy - Positive
 The value of the dollar remains relatively high, which hurts
the manufacturing sector
 Corporate earnings have declined for the past 6 quarters

32. U.S. Economy - Positive
 With interest rates at record low, corporations borrow money
to buy back stock and pay dividends
 This action greatly increases the wealth of the wealthy

34. Wealth
 Wealth declined $13 trillion in “Great Recession”
 Wealth has risen $30 trillion in last 5 years
 Must own a house and/or be in the stock market

35. Housing
 Existing home sales were 5.33M in August
 New residential construction was the best in 2015 since 2007
and this year will be better than the last
 Even so, home construction is only at recession levels
 Inventories of unsold homes are at record lows, Charlotte at
1.9 months
 Millennials – rent or buy

36. Housing
 Existing home prices are rising around 5.5% year over year
 Home prices are just 2% below the peak reached in 2006
 The home ownership rate(62.9%) is at its lowest since 1965
 New single family home sales were above 600,000 in July and
August

38. Housing
 The share of first time home purchasers remains at a three
decade low
 Student loans and bad credit
 Many are forced to rent
 Renters and wealth

39. U.S. Employment - Positive
 The unemployment rate rose to 5.0% in September
 Created an average of 229,000 new jobs per month in 2015
 Created an average of 178,667 new jobs each month this year
through September
 The labor participation rate hit a 38-year low in 2015 and has
risen slightly during 2016

40. Employment
 Bureau of Labor Statistics estimates that about 6.8 million
jobs unfilled due in part to a lack of qualified workers
 What jobs: computer software engineers, nurses, math and
science teachers, truck drivers, machinists, welders

41. North Carolina Employment
 NC needs to create 62,500 jobs per year to keep up with
projected population growth for the next 20 years
 Almost 60% 0f all jobs created in NC since the “Great
Recession” were created in: (1) Raleigh/Durham-RTP, and (2)
Charlotte

42. NC Employment Situation
 The unemployment rate for August was 4.6%
 Grew about 74,800 jobs in the last 12 months through August
 NC job growth in the last year has been slightly better than
that of the U.S.

43. SC Employment Situation
 The unemployment rate dropped in August to 5.1%,
which is the 4th consecutive monthly drop
 Grew 54,553 jobs over the last 12 months

44. What To Do?!
 Regulation Czar – moratorium on new regulations
 Build Infrastructure – regulations
 Immigration reform
 Simplify and flatten the tax code for businesses and
individuals

45. The FED
 In a box
 All Central Bankers are looking for one thing which is not
around – a 2% rate of inflation
 FED should forget about raising rates until the 10-year bond
rate rises above 2.2% and stays there for more than 30 days
 The FED has over-estimated economic growth 13 out of the
last 15 years - Why?

46. The Outlook
 While GDP growth has been growing slightly above 2%
each year, it is now expected to grow less than 2% this
year and the next
 The US, NC, and SC unemployment rates should
remain around 5.0%
 The value of the dollar will continue to cause
headaches for manufacturing

47. The Outlook
 Wage and salary growth will remain at about 3% and
consumer spending growth will increase to 3%
 Housing will continue to be a bright spot - with a slight shift
in construction to single family homes
 The FED may raise rates later this year by .25%
 Interest rates will remain at very low levels for years

48. Our Q & A Sponsor

49. Dr. Bill Ingram
President
Durham Technical Community College

50. Our Q & A Sponsor

51. Aaron Nelson
President & CEO
Chapel Hil-Carrboro Chamber of Commerce

52. 2016 Economic Conditions
Survey Results
(Q3 2016 - 77 responses)

53. How Has the Current State of the
Economy Effected Your Organization
43.6%
56.4%
22.4%
8.10%
50.4% 49.9%
35.20%
6.1%
27.6%
56.50%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Q4 2008 Q2 2009 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q3 2016
Negatively Not Much Positively

54. 14.5%
61.3%
22.6%
1.6%
Good Growth
Moderate Growth
Remain Flat
Decline
Given the state of the local economy, how do you
expect your organization to perform over the next 12
months

55. 68.9%
23.0%
8.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Increase No Change Decrease
How do you expect your organization's sales
to change during the next 12 months

56. 35.8%
39.7%
29.8%
39.7%
46.1%
5.3%
14.0%
0.0% 0.0% 1.5%
58.9% 58.9%
70.2%
60.3%
52.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q3 2016
Do You Have Plans to Increase or Reduce Your
Workforce in the next 12 Months?
Add workers Reduce Workforce No reduction or addition

57. 10.5%
42.1%
21.1%
22.8%
3.5%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Very Pro-Business
Somewhat Pro-Business
Neutral on Business
Somewhat Anti-Business
Very Anti-Business
Thinking About the Local Business Climate,
Would You Say the Local Government Here is

58. innovate

59. deliver value

63. NANCY WILLIAMS
INVESTMENT ADVISER
CAROLINA CAPITAL SOLUTIONS
919-943-5577
NANCY@NANCYWILLIAMSADVISOR.COM
CAROLINA.TAGRESOURCES.COM

64. Upcoming Events
Performance Golf Classic
Nov. 7, 8:30 a.m.-5 p.m.
Chapel Hill Country Club
PRIMETIME Business Expo
4-7:30 p.m., Nov. 10,
UNC Friday Center
www.carolinachamber.org/events
Salute to Community Heroes presented by AT&T
Dec. 8, 6-8 p.m.
University Place
Submit nominations by Monday, Oct. 24

65. You’re invited to SUPERPOWER our economy at Orange County’s largest
business expo: PRIMETIME
PRIMETIME Business Expo
4:00-7:30 p.m., Thursday, Nov. 10 at the UNC Friday Center

66. Thank you