RALEIGH – We’re only a few days into 2020, but economists are already buzzing on what the year holds.
Mark Vitner, Well Fargo’s managing director and senior economist, is among those scheduled to give his key predictions today at the Raleigh Chamber’s “Launch 2020” at the Duke Energy Center for the Performing Arts starting at 2 pm.
WRAL TechWire’s Chantal Allam had the chance to pose a few questions to him ahead of the event. Here’s what he had to say.
- What’s your outlook for 2020 as we usher in a new decade?
We are fairly optimistic about the economy in 2020. The U.S. economy ended 2019 with strong momentum. Job growth gained strength and wage and salary growth accelerated.
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The strength in the economy appears to be broadening across industries and geographies. Within North Carolina, Winston-Salem saw notable improvement this past year.
- Things are heating up in the Middle East. US and China haven’t resolved their trade dispute. Uncertainty still hangs over Brexit. How do you think this will affect the global and US economy going forward?
While the trade conflict with China has slowed manufacturing activity across the country and in North Carolina, we believe phase one of the trade deal will be signed in mid-January and turn out to be better than is now widely expected. Trade frictions with China are likely to be ongoing for the foreseeable future. China has a very different interpretation of capitalism, free trade, and intellectual property.
The nation’s unemployment rate is currently around 3.5 percent, which traditionally would be thought to be full employment. My sense is that the popularity of LinkedIn and online job search sites has made the labor market more efficient.
Employers are seeking workers before workers are looking for jobs, which reduces frictional unemployment. The Gig economy also allows unemployed workers to find paying work while they are searching for a permanent job, which reduces measured unemployment.
- What about on a regional level? How is North Carolina fairing?
North Carolina’s economy added 90,000 jobs last year and is adding jobs at a pace that is nearly 1.5 times that of the nation. Job gains are broad based with construction seeing the fastest percentage increases, while healthcare and education and business and professional services are adding the most jobs. The combined Raleigh-Durham metropolitan area added around 25,000 jobs this past year, while the Charlotte area added around 32,000 jobs.
The technology sector is responsible for the bulk of job gains in both markets. We are looking for the Raleigh-Durham area to add 22,000 jobs this year and for Charlotte to add 27,000 jobs. The state should see a net gain off around 75,000 jobs.
- What should we be looking out for?
Brexit, the China trade deal, Iran and the Trump impeachment and 2020 presidential election are all big questions for the coming year. We believe that most of these will prove to be minor speed bumps.
The economy has strong momentum today and there are few apparent excesses in the economy today, which is surprising given that we are now well into the eleventh year of this economic expansion. Expansions do not die of old age, however, they tend to be killed off by policy mistakes by the Federal Reserve.
Fortunately the Fed appears to know this and has adopted an easier monetary policy that we believe will remain in place well into 2021. Without a tightening of monetary policy a recession is likely a long way off, which for now means 2022 or later.