RESEARCH TRIANGLE PARK – Things are heating up in the Middle East. The ongoing trade dispute between the US and China doesn’t seem to be going anywhere fast. And Brexit still isn’t a done deal.
These are the challenges that some fear could lead to a global recession in 2020.
But if local economists are to be believed, they’ve got nothing to worry about.
“The recession is quite a ways out there,” said Dr. Harry Davis, an economist with the North Carolina Bankers Association, at the 18th Annual Economic Forecast Forum on Tuesday.
“It’s the eleventh year in recovery – the longest in history. Unemployment rates are at a 50-year low. The employment gains have led to wage and salary growth in excess of 3 percent. That, of course, has driven consumer spending to around 3.4 percent. Those are some pretty positive numbers for the economy.”
On a state level, he added, things are also looking good.
“The vast majority [of banks] intend to either maintain their employment base in North Carolina, or add workers this year. The bankers, overall, feel good about the state,” he told the 1,500-strong crowd gathered at the Sheraton Imperial Hotel and Convention Center.
Dr. Eugene Flood, managing partner at Next Sector Capital, also appeared on the same panel. He agreed that a recession is unlikely.
“We would put the probability of a recession in the area of 10 to 20 percent – low, because you can never write it off completely because something could happen to shock the economy and push us over the edge.
“We were higher than that last year.”
Sarah House, senior economist at Wells Fargo Securities, added that consumer fundamentals are strong, and debt remains low.
“When you look at household balance sheets, you have net worth at an all-time high,” she said.
“At the end of the day, the external facing parts of the economy, the part that the United States is relying on trade, isn’t very big. We are, in large part, a domestic facing service sector.
“If you look at the overall position of consumer spending – it’s about 70 percent of GDP – there’s a lot of wherewithal there. This hasn’t been a credit-fueled expansion, at least on the part of the consumer. It’s going to be hard to get a recession, unless you see that consumer retrench.”
The state is also holding its own on the jobs front, said Dr. Michael Walden, William Neal Reynolds professor of agricultural and resource economics at NC State University.
“Job growth has really been our stellar statistic since the Great Recession ended,” he said, adding that he has high hopes that the state will land its first-ever auto assembly plant in the coming year.
“I’m going to go out on a limb and say the odds will go up because on the United States-Mexico-Canada Agreement, there are some provisions for Mexican autoworkers pay to go up, thereby making them less competitive with United States and Canadian autoworkers. I’m still keeping my fingers crossed for that.”