The Chamber's Economic Outlook Briefing, Presentation by Dr. Michael Walden
1. ECONOMIC OUTLOOK 2019:
THE LATE INNINGS OF GROWTH?
Dr. Mike Walden
Reynolds
Distinguished
Professor
North Carolina
State
University
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2. A REVIEW OF 2018: A GOOD YEAR
GDP GROWTH: 3.2%
2.6 MILLION JOBS ADDED
JOBLESS RATE: 3.9%
INVEST. RT.: 17.7%
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3. IN JUNE 2019, CURRENT EXPANSION WILL BE
LONGEST IN HISTORY, BUT WILL IT GO ON?
THREE VIEWS:
1. YES, BECAUSE THERE WAS A
βRECESSIONβ IN 2015
2. YES, BECAUSE TAX CUTS AND
DEREGULATION RE-CHARGED THE
ECONOMY
3. NO β RECESSION IN 2020
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4. WHAT COULD IGNITE A RECESSION?
HOUSEHOLD DEBT
BUSINESS DEBT
ENERGY PRICES
FEDERAL RESERVE
TRADE WAR
FOREIGN SHOCK
STOCK MARKET
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5. FEDERAL RESERVE HAS SHIFTED
FOCUS FROM GROWTH TO INFLATION
FEDβS DUAL MANDATE
βTAKE THE PUNCH BOWL AWAYβ
HAS BEEN GRADUALLY
INCREASING INTEREST RATES
IF MOVE TOO FAST, COULD
SQUASH PRIVATE SPENDING
SIGNAL OF A PAUSE IN HIKES?
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6. TRADE WARS
* NEW NAFTA: USMCA
* EU TALKS
* S. KOREA TREATY
* JAPAN TALKS
REMAINING BIG
CHALLENGE β CHINA
0.4% HIT TO GDP
GROWTH RATE IF FAIL
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7. FOREIGN SHOCK
CHINAβS CHALLENGES:
SLOWING GROWTH
HIGH DEBT
WOBBLY FINANCIAL SECTOR
TRADE WAR WITH U.S. β
MEANS MORE TO CHINA
ALSO β SLOWING GROWTH
IN EUROPE AND JAPAN
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9. WHAT ABOUT THE NATIONAL DEBT?
WE SLEEPWALKED THROUGH
RECENT DEBT HIKES AS
INTEREST RATES FELL
BUT WITH HIGHER RATES
AND FASTER DEBT GROWTH:
INTEREST ON DEBT AS % OF
BUDGET COULD DOUBLE
FROM 7% TO 14% IN 2028
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10. MANY STRUCTURAL CHALLENGES
LABOR PRODUCTIVITY
AGING POPULATION & SLOW LABOR
FORCE GROWTH
βINVISIBLEβ UNEMPLOYMENT
HOLLOWING-OUT OF LABOR MARKET
URBAN/RURAL DIVIDE
TECHNOLOGY AND UNEMPLOYMENT
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11. OUTLOOK FOR 2019
GROWTH BUT SLOWER: GDP
UP 2.5% COMPARED TO 3.2%
IN 2018
JOBLESS RATE NOW 3.9%;
POST WW II LOW IS 2.8% -
KEY TO LOWER IS RAISING
PARTICPATION RATE
WATCH INFLATION AND FED
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13. STATE ECONOMY IMPROVED IN 2018
100,000 NET NEW JOBS β
FASTER GROWTH RATE
THAN NATION
BUT SLOWER GDP
GROWTH RATE THAN THE
NATION
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14. ALSO, PROGRESS ON THE TWO ECONOMIC DIVIDES
FASTER GROWTH RATE IN
MIDDLE-PAY JOBS THAN
IN RECENT PAST
FASTER GROWTH RATE IN
RURAL AREA JOBS THAN
IN RECENT PAST
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15. NORTH CAROLINA LEADING ECONOMIC INDICATORS
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70
75
80
85
90
95
100
105
2007feb
2007may
2007aug
2007nov
2008feb
2008may
2008aug
2008nov
2009feb
2009may
2009aug
2009nov
2010feb
2010may
2010aug
2010nov
2011feb
2011may
2011aug
2011nov
2012feb
2012may
2012aug
2012nov
2013feb
2013may
2013aug
2013nov
2014feb
2014may
2014aug
2014nov
2015mar
2015jun
2015sep
2015dec
2016mar
2016june
2016sep
2016dec
2017mar
2017june
2017sep
2017dec
2018mar
2018june
2018sep
Source: calculations by Dr. Michael Walden
NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC
INDICATORS
16. ON-GOING CHALLENGES
MORE GAINS IN K-12
COLLEGE COSTS AND OUTCOMES
WORKFORCE: RE-TRAINING
ROADS: FUNDING
DEMOGRAPHICS: AGING β
BATTLE OVER $ WITH YOUTH?
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