DURHAM – With much uncertainty in global markets, local economists can agree on one thing — North Carolina can expect to see slower growth in 2019.
Nevertheless, there’s a silver lining: it doesn’t look like we’re headed for a recession, or at least not for the time being.
“Recession is when you actually have negative growth,” said Dr. Michael Walden, North Carolina State University’s William Neal Reynolds Distinguished Professor.
“We’re going to continue to grow, both North Carolina and nationally. But I think the growth rate will be slower.”
He was appearing on an economic panel at the 17th Annual Economic Forecast Forum on Friday.
More than 1,000 leaders in business, government, education and nonprofits packed into the Sheraton Imperial Hotel and Convention Center for the event, hosted by the NC Chamber and the North Carolina Bankers Association.
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Other economists agreed with Walden’s assessment.
“We’ll come out of 2018 with growth that looks like something that’s around 3 percent of real gross domestic product (GDP),” said Dr. Eugene Flood, managing partner at Next Sector Capital.
“As we go through this year, we’re going to see a number that looks like 2.4 percent, something like that, and by the time we get to the end of 2020, we’re maybe growing at 1.9 percent. We’re going to have this decline.”
Flood said it’s important to step back and analyze the different components that drive GDP growth in the US. They include: the consumer, corporate investments, government spending and the trade sector.
“In each one of those, we’re going to likely see a decline over the next couple of years,” he said.
North Carolina’s forecast
On a regional level, North Carolina isn’t looking too shabby, either.
That’s even after the state has enacted sweeping tax cuts since 2013, costing billions in yearly revenue.
In 2019, the personal income tax rate will fall again from 5.499 percent to 5.25 percent, thanks to the 2017 appropriations act.
More than 1,000 leaders in business, government, education and nonprofits packed into the Sheraton Imperial Hotel and Convention Center for the event, hosted by the NC Chamber and the North Carolina Bankers Association.
“It’s been $2.6 billion since 2012 in reductions, and so far, the economy has been growing,” said Emma Turner, economist with the North Carolina General Assembly.
“We’ve had steady growth that has allowed revenue to continue to growth despite these tax cuts. With the slowing of the economy, we may see some flattening out in our forecast.
“In general, we will wait of the April surprise when we receive information about tax returns in April. And we’ll put out revenue forecast in May.”
Trade deal with China?
Economists also seemed optimistic that a trade deal between the U.S. and China was imminent.
“All eyes right now are on the continuing negotiations,” said Walden. “I think we are seeing serious negotiations now between the US and China over trade. I’m expecting a deal. It won’t be everything the US wants. I think China will give up some things. It will be very positive for the market.”
Added Dr. Harry Davis, economist with the North Carolina Bankers Association: “China needs to blink. It’s hurting them far worse than it’s hurting us. Their stock market is not in a correction. They’re a bear market now. The yuan has fallen out of bid. The US dollar is up relative to the Euro and the Chinese yuan.
“Europe is slowing and China is slowing. The US economy is the pick of the litter.”
