CHARLOTTE – No recession occurred in 2022, despite many predictions the economy would fall into an economic recession—and the same could be true of 2023.

That’s according to an economist at the University of North Carolina at Charlotte who spoke about the economic environment in the United States and in North Carolina at the North Carolina Economic Forecast on Wednesday afternoon.

“Fact of the matter is: there was no recession in 2022,” said John Connaughton.  “In the first quarter, we slipped a little, the second quarter, not quite as bad, and we expect the third and fourth quarter when all the data are in to have modest growth during the year.”

Overall, said Connaughton, the economy is likely to have grown by about 3.4% this year.

That’s even as some sectors—those affected by increasing interest rates—shrunk this year.

Still, said Connaughton, it’s been a great year for job growth, especially in North Carolina.

No matter whether the gross domestic product within the sector was growing, stable, or falling, there was job growth across North Carolina’s economy, he pointed out.

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Which means… no recession in 2023?

“We don’t really see that there will be a recession in 2023, given the current information that we have,” said Connaughton.

That doesn’t mean that there won’t be economic pain for households or for communities.  That’s because while the state’s unemployment rate is currently 3.8%—rising in recent months—job growth is expected to slow and the state’s unemployment rate is expected to increase in 2023, after the first of the year, Connaughton said.

The economy can expect to see a continued job slide in 2023, with probably about “less than half as many jobs will be created,” according to Connaughton.

“We’re expecting the employment growth to be a little bit more modest in 2023,” he noted.  “We expect all sectors to basically still try to backfill positions going forward as far as the unemployment rate is concerned.”

The latest WRAL TechWire Jobs Report shows that in the Triangle, job postings have slowed in recent months.  And a recent report from CompTIA shows that tech sector job openings have fallen in North Carolina even as tech sector employment has increased.

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There are still major challenges ahead

The U.S. economy is very different than it was in the 1980s, 1990s, and early 2000s, noted Connaughton, in large part due to the country’s demographics, which impact the labor market.

During the next half-decade, said Connaughton, we will be experiencing “the peak of Baby Boomers.”

But those individuals—21.6 million of them—are already beginning to retire, and more retirements will follow.

Here’s the math, explained Connaughton: Baby Boomers are 21.6 million in number, but the next generation of workers only total 20.75 million “that will be of age to replace them.”

The labor force participation rate indicates that some people have already left the workforce, and those people may not plan to return.  That’s led to ongoing labor market pressures, particularly for employers who are still seeking to hire talented workers.

“You can start to see that the labor force participation rates are going to continue to go down,” said Connaughton.  “We really have some labor force issues that we really should be starting to address.”

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But a coming recession is still conceivable

Still, noted Connaughton, in answering questions during a virtual Q&A period on Wednesday, it is conceivable that the U.S. economy could move into a recessionary period.

“I can conceive of that, but it’s going to take the Fed in my estimation,” noted Connaughton.  “I think there are two things that would need to happen in order for that to take place.”

First, the Federal Reserve would move up the federal funds rate to a mark upwards of 6%, and second, unemployment would increase and remain persistent in the economy.

In summary, noted Connaughton, we may know more following next week’s meeting of the Federal Reserve Open Market Committee and from any public statements made by Jerome Powell, the chair of the Federal Reserve.