Is North Carolina headed for another recession?
N.C. State University economist Michael Walden isn’t using that word – yet – but in his latest state economic data reports he warns that the recent trend is not good.
“The[NCSU] Index is not flashing ‘recession,’ but it may be suggesting a less upbeat year than was thought just four months ago,” Dr. Walden wrote in its latest report that was published Monday.
The NCSU Index of North Carolina Leading Economic Indicators is based on five core elements:
- The Economic Cycle Research Institute (ECRI)’s Weekly Leading Index
- North Carolina initial claims for unemployment benefits
- North Carolina building permits
- Average weekly hours of work of all North Carolina employees in manufacturing
- Average weekly earnings of all North Carolina employees in manufacturing
Walden notes that the combined index dropped in March “almost 1 percent from the February reading.” And the Index has now dropped in four of the last six months.
Since the forecast is designed to produce a look at the state’s economy four to six months ahead, Walden concluded:
“It appears the surge in the Index in late 2014 may have been temporary, and the adverse impacts of the higher-valued dollar on manufacturing and weak household income growth on spending may be taking its toll.”
The state’s unemployment rate was 5.4 percent in March, up from 5.3 percent from February and March.
More than 26,000 people landed jobs in the month, lifting the number of those working to nearly 4.5 million, but the ranks of the unemployed increased by nearly 6,000.
A higher-valued dollar drives up the costs of U.S. goods overseas, and North Carolina relies heavily on both exports as well as manufacturing.
But the index is intertwined, and Walden noted the Index decline is based on a variety of factors.
“Leading the retreat was a 24 percent reduction in building permits and more than a 6 percent rise in initial jobless claims,” he wrote.
Hours worked did slightly increase, but earnings declined.
