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Economic Outlook Forum
The economic outlook for 2022 highlights key questions regarding the U.S. economy's recovery from the pandemic, federal spending, and employment challenges in North Carolina. Variations in recovery across sectors and regions suggest ongoing labor market disruptions and a need for businesses to adapt with higher wages and productivity improvements. Despite concerns about inflation and federal debt, a significant number of businesses expect growth and job additions in the coming year.
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Economic Outlook Forum
- 1. ECONOMIC OUTLOOK 2022: RECOVERYFROM THE PANDEMIC AND DEALING WITH NEW CHALLENGES Dr. Michael L. Walden, Reynolds Distinguished Professor Emeritus North Carolina State University
- 2. THE ”BIG” QUESTIONSFOR 2022 1. WILL THE ECONOMY CONTINUE TO IMPROVE? 2. HOW WILL WE “PAY FOR” FEDERAL SPENDING DURING THE PANDEMIC? 3. HOW WILL THE ECONOMY ADJUST AFTER THE PANDEMIC?
- 3. DOWNS AND UPSOF THE US AND NC ECONOMIES (QUARTERLY GDP AS PERCENT OF 2019 IV GDP) 90 92 94 96 98 100 102 104 106 2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2021 III 2021 IV US NC
- 4. LEADING AND LAGGINGSECTORS IN THE NC ECONOMY (% OF 2019 IV GDP) Information 119% Construction 100% Professional Services 114% Government 99% Administrative Services 114% Agriculture 98% Finance 109% Retail Trade 98% Wholesale Trade 105% Education 96% Manufacturing 104% Transp. & Warehousing 94% Health Care 102% Personal Services 94% Restaurants & Hotels 102%
- 5. RECOVERY HAS ALSOVARIED WITHIN NORTH CAROLINA EMPLOYMENT IN DECEMBER 2021 AS % OF EMPLOYMENT IN FEBRURAY 2020 GREENVILLE 102% CHARLOTTE 989% DURHAM/CH 100% WINSTON-SALEM 98% HICKORY 101% FAYETTEVILLE 98% JACKSONVILLE 100% GOLDSBORO 97% RALEIGH-CARY 100% NEW BERN 98% WILMINGTON 101% ROCKY MOUNT 97% BURLINGTON 100% ASHEVILLE 97% NORTH CAROLINA 99% GREENSBORO/HP 96%
- 6. TW0 PICTURES OFTHE LABOR MARKET 0 2 4 6 8 10 12 14 16 jan, 2020 feb mar apr may jun jul aug sept oct nov dec jan, 2021 feb mar apr may jun jul aug sept oct nov dec UNEMPLOYMENT RATE, % US NC 55 56 57 58 59 60 61 62 63 64 Jan, 2020 Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan, 2021 Feb Mar Apr May Jun Jul Aug Sept Oct. Nov dec LABOR FORCE PARTICIPATION RATE US NC
- 7. THE “SURPRISE”SHORTAGE OFLABOR REASONS WHY FEWER PEOPLE HAVE BEEN LOOKING FOR WORK: • CONTINUED WORRY OVER COVID • UNCERTAINTY ABOUT SCHOOL SCHEDULES • REDUCED AVAILABILITY OF CHILD CARE • CASH FROM STIMULUS CHECKS, CHILD PAYMENTS, ADDITIONAL JOBLESS BENEFITS, EXPANDED FOOD STAMPS, EXPANDED “OBAMACARE” • MORE RETIREMENTS
- 8. ALSO, A RE-ALLOCATIONOF WORKERS IS OCCURRING MANY WORKERS USED THE TIME AND FINANCIAL SUPPORT DURING THE PANDEMIC TO IMPROVE THEIR SKILLS
- 9. BUSINESS RESPONSES TOLABOR SUPPLY ISSUES 1. ATTRACT LABOR WITH HIGHER PAY AND/OR BENEFITS 2. SUBSTITUTE TECHNOLOGYAND AUTOMATION FOR WORKERS 3. IMPROVE WORKER PRODUCTIVITY
- 10. LABOR AVAILABILITY SHOULD IMPROVEAS MANY FINANCIAL ASSISTANCE PROGRAMS ENDED RETURN OF SOME RETIREES? THE UP-SKILLING OF MANY WORKERS WILL PRESENT ON-GOING ISSUES FOR SOME INDUSTRIES THERE ARE LONG-RUN SOLUTIONS, BUT TAKES TIME
- 11. UNPRECEDENTED FEDERAL ASSISTANCE $5.5TRILLION 25% of GDP $80 BILLION to NC
- 12. FEDERAL AID SUPPORTEDPERSONAL INCOME 18 18.5 19 19.5 20 20.5 21 21.5 22 22.5 23 2019, I 2019, II 2019, III 2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2021, III US Trillions $ 490 510 530 550 570 590 610 2019, I 2019, II 2019, III 2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2012, III NC Billions $
- 13. FIRST PANDEMIC OFTHIS SIZE IN A CENTURY – UNKNOWNS, UNCERTAINITIES ERR ON THE SIZE OF TOO MUCH HELP FUNDS USED TO MAINTAIN HOUSEHOLDS, BUSINESSES, INSTITUTIONS WANTED ECONOMY TO SURVIVE WAS TOO MUCH FINANCIAL AID PROVIDED?
- 14. BALANCING THE CURRENT AGAINSTTHE FUTURE OPPORTUNITY COST OF WHAT ELSE COULD DO WITH FUTURE FUNDS LOSSES IF LET ECONOMY COLLAPSE DURING THE PANDEMIC
- 15. FEDERAL RESERVE ALSOSTEPPED UP – FINANCED GOVERNMENT BORROWING, KEPT INTEREST RATES LOW 0 0.5 1 1.5 2 2.5 3 2019 2021 Federal Funds Rate, % 0 1 2 3 4 5 6 7 8 9 2019 2021 Federal Reserve Holdings, $trillions
- 16. THE ”FED” SUPPORTSITS EFFORTS BY CREATING $ MONEY SUPPLY UP 85% SINCE BEGINNING OF PANDEMIC
- 17. ISSUE 1: CAPACITYTO CARRY FEDERAL DEBT (federal debt interest payments as a percent of GDP)
- 18. ISSUE 2: INFLATION(% change) 0 1 2 3 4 5 6 7 8 2014 2015 2016 2017 2018 2019 2020 2021 2022 total
- 19. TWO FACTORS BEHINDHIGHER INFLATION DEMAND PULL: ECONOMY IS FLUSH WITH CASH AND ”PENT-UP” DEMAND HIGHER INFLATION RATE (4% to 5%) THROUGH 2022. HIGHER INFLATION IS THE “PRICE” OF THE ENORMOUS FEDERAL HELP. SUPPLY PUSH: FASTER INFLATION IS RELATED TO DISRUPTIONS IN THE PRODUCTION OF PRODUCTS AND SERVICES AS THE ECONOMY RECOVERS FROM THE PANDEMIC. THE DISRUPTONS ARE TEMPORARY.
- 20. CHALLENGE FOR THE FEDERALRESERVE REDUCING STIMULUS – MEANING INCREASDING INTEREST RATES AND DECREASING MONEY GROWTH –WITHOUT HINDERING ECONOMIC GROWTH
- 21. WE FACED THESAME SITUATION IN THE LATE 1970s THE FED UNDER PAUL VOLCKER TOOK HARSH ACTION
- 22. FORECASTED PATH OFNORTH CAROLINA’S REAL GDP (red: without new variants; blue: with new variants; green: recession) 507 512 467 504 509 505 510 515 521 542 556 450 470 490 510 530 550 570 2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2021, III 2021, IV 2022 2023
- 23. HOW WILL THEECONOMY ADJUST AFTER THE PANDEMIC?
- 24. MORE LABOR MARKET DISRUPTON BIGGESTISSUE OF POST- PANDEMIC ECONOMY SHIFT FROM PRODUCTION TO DELIVERY, SERVICES MORE JOBS IN TECHNOLOGY POST-HIGH SCHOOL TRAINING, APPRENTICESHIPS, ON-THE-JOB TRAINING, COLLABORATIONS BE PRO-ACTIVE
- 25. BIG IMPLICATIONS FOR EDUCATION SOMELEVEL OF DISTANCE LEARNING IS HERE TO STAY AT ALL LEVELS OF EDUCATION SHOULD GET BETTER EDUCATION RE-MADE
- 26. HIGH SPEED INTERNET NOWA NECESSITY CONTINUED EXPANSION OF CABLE PROVISION BUT NEW PROVISION – LOW ORBITING SATELLITES FULL INTERNET BY 2030? INTERNET EXPANSION
- 27. TELE-WORKING 8% PRE-VIRUS 60% ATPANDEMIC PEAK 20% - 30% LONG-RUN LEVEL WATCH HOW INTERNET IS PROVIDED WORK – HOME BALANCE
- 28. DRONE DELIVERY OF PRODUCTS;INTERNET DELIVERY OF SERVICES AVOIDS FACE TO FACE CONTACT NEXT: 4D HOME MANUFACTURING IMPLICATIONS FOR CONTROL OF THE SKIES
- 29. RECONSIDERATION OF RESIDENTIAL LOCATION “DISTANCEIS DEAD” PROXIMITY TO WORK, SCHOOLS, SHOPPING NO LONGER NEEDED “NEW FARM LIFESTYLE” ON CHEAPER LAND INTERNET FROM THE SKY? WHERE IS HOME ?
- 30. IMPLICATIONS FOR NORTHCAROLINA NORTH CAROLINA HAD A STRONG ECONOMY IN 2021 – RECORD JOB GROWTH; BIGGER GAIN IN PRODUCTION THAN THE NATION; $10 BILLION ANNOUNCED INVESTMENTS CONTINUED GROWTH –PERHAPS ACCELERATED – 13 MILLION POPULATION IN 2030 RATHER THAN 12 MILLION NORTH CAROLINA CONSIDERED A “SAFE STATE” LOOK FOR SUBURBS TO HAVE FASTEST GROWTH NEXT GAME-CHANGER – UNIVERSALLY AVAILABLE HIGH SPEED INTERNET – COULD SPARK A RURAL REVIVAL
- 31. AVAILABLE ON FEBRUARY 22 RELAUNCH:RENEWING FAMILIES AND REVIVING THE AMERICAN DREAM IN THE NEW INDEPENDENT LIFESTYLE MICHAEL L. WALDEN
- 32. Annual Economic Conditions Survey February2022 - 103 Responses
- 33. 2 Organization Size 1-5 employees,41% 6-50 employees, 42% 50+ employees, 17% Feb 2022 Chamber Member Survey
- 34. How has thecurrent state of the economy affected your organization?
- 35. Percent of EnterprisesReporting the Current Economy is Negatively Impacting their Organization Declines to 20% 4 44% 56% 39% 52% 32% 22% 8% 3% 2% 4% 32% 20% 0% 10% 20% 30% 40% 50% 60% 2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Feb 2022 Chamber Member Survey “How has the current state of the economy affected your organization?”
- 36. Percent of EnterprisesReporting the Economy is Positively Impacting their Enterprise Rises to 38% 5 “How has the current state of the economy affected your organization?” 6% 5% 12% 17% 32% 28% 57% 73% 71% 69% 28% 38% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Feb 2022 Chamber Member Survey
- 37. How Has theCurrent State of the Economy Affected Your Organization? 6 20% 42% 38% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Negatively Not Much Positively Feb 2022 Chamber Member Survey
- 38. How Has theCurrent State of the Economy Affected Your Organization? 7 43.6% 19.6% 50.4% 42.2% 6.1% 38.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Negatively Not Much Positively Feb 2022 Chamber Member Survey
- 39. Same Storm, DifferentBoats (Feb 2021) 6.8 5.9 5.84 5 4.7 4.6 4.5 4.5 4.5 4 4 4 3.6 3.5 2.2 2 1 1 2 3 4 5 6 7 8 9 10 Construction & Manufacturing Professional Services (Finance, Insurance, etc) Real Estate/Rental/Leasing Government/Public Sector Education Transportation Arts, Entertainment, and Recreation Communications Nonprofit/Social Services Healthcare Information Technology Other Services (HVAC, Mechanic, etc) Retail Utilities Personal Services (Hair, Nail, Fitness, etc.) Food Service/Drinking Places Accommodations Average: 4.7 1 = Very Negatively 5 = Neutral 10 = Very Positively “How has the current state of the economy affected your organization?” (2021) Feb 2021 Chamber Member Survey
- 40. 2.0 3.0 4.7 4.7 4.9 5.0 5.0 5.0 5.3 5.4 5.9 6.0 6.0 6.5 6.7 7.0 7.5 0 1 23 4 5 6 7 8 9 10 Accommodations Personal Services (Hair, Nail, Fitness, etc.) Communications Utilities Food Service & Drinking Places Education Healthcare Retail Other Services (HVAC, Mechanic, Plumbing,… Government/Public Sector Arts, Entertainment and Recrecation Non-Profit/Social Services Religious Institution Transportation Professional Services (Finance, Insurance,… Construction/Manufacturing Real Estate/Rental/Leasing Same Storm, Different Boats (Feb 2022) Average: 5.7 1 = Very Negatively 5 = Neutral 10 = Very Positively “How has the current state of the economy affected your organization?” (2022) Feb 2022 Chamber Member Survey
- 41. Impact of theEconomy Varies Little by Size of Enterprise Feb 2022 Chamber Member Survey 5.83 5.65 5.35 1 2 3 4 5 6 7 8 9 10 Micro Enterprise (1-5 employees) Mid-Size Business (6-50 employees) Large Business (50+ employees) How has the current state of the economy affected your organization? (2022) 1 = Very Negatively 5 = Neutral 10 = Very Positively
- 42. Do you expectsales to increase or decrease over the next 12 months?
- 43. 76% of RespondentsExpect Sales to Increase in the Next 12 Months 76% 22% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Increase No Change Decrease Feb 2022 Chamber Member Survey “Do You Expect Sales to Increase or Decrease Over the Next 12 Months?”
- 44. …but that’s whatwe always say 76% 22% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 2016 2018 2019 2020 2021 2022 Increase No Change Decrease Feb 2022 Chamber Member Survey “Do you Expect Sales to Increase or Decrease Over the Next 12 Months?”
- 45. Do you planto add or reduce workers over the next 12 months?
- 46. 68% 31% of respondents have NOPLANS TO ADD or reduce workforce 1% of respondents plan to REDUCE workforce of respondents plan to ADD workers Feb 2022 Chamber Member Survey “Do You Plan to Add of Reduce Workers in the Next 12 Months?”
- 47. 68% of RespondentsPlan to Add Workers in 2022 36% 40% 30% 40% 46% 54% 44% 45% 52% 68% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022 Feb 2022 Chamber Member Survey “Do You Plan to Add or Reduce Workers Over the Next 12 Months?”
- 48. Would you saythat local government here is pro-business, neutral, or anti-business?
- 49. Belief Local Governmentin Pro-Business Increases Feb 2022 Chamber Member Survey 62% 15% 18% 65% 21% 14% 0% 10% 20% 30% 40% 50% 60% 70% Somewhat or Very Pro- Business Neutral Somewhat or Very Anti- Business 2021 2022 “Would you say local government here is pro-business, neutral, or anti-business?”
- 50. Respondents Believe LocalGovernment is Pro-Business Feb 2022 Chamber Member Survey 18% 48% 21% 12% 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Very Pro-Business Somewhat Pro- Business Neutral on Business Somewhat Anti- Business Very Anti-Business 2022 “Would you say local government here is pro-business, neutral, or anti-business?”
- 51. Percentage of RespondentsWho View Government as “Very Pro-Business” Dips from 2021 High Feb 2022 Chamber Member Survey 14% 11% 13% 6% 10% 22% 18% 0% 5% 10% 15% 20% 25% 2015 2016 2018 2019 2020 2021 2022
- 52. In three words,how would you describe your organization's current financial condition?
- 53. “In three words,how would you describe your organization's current financial condition?”
- 54. “In three words,how would you describe your organization's current financial condition?” (Most Frequent Words) Stable Good Strong Steady Struggling Growing Improving Growth
- 55. In three words,how would you describe your organization's current economic outlook?
- 56. “In three words,how would you describe your organization's current economic outlook?”
- 57. “In three words,how would you describe your organization's current economic outlook?” (Most Frequent Words) Positive Optimistic Hopeful Cautiously Good Growth Strong Cautious
- 58. “Other than endingthe pandemic, what does your organization need to be successful in 2022?”
- 59. “Other than endingthe pandemic, what does your organization need to be successful in 2022?
- 60.