‘Recession bell continues to ring … just got louder’ warns NC State economist in new report

RALEIGH – New economic data for North Carolina’s economy point more strongly to a recession after a drop in the monthly index of economic indicators compiled by N.C. State economist Dr. Mike Walden.

“Hold on,” he warns.

“The recession bell continues to ring, and it just got louder,” Walden notes in the NCSU Index of North Carolina Leading Economic Indicators.

The data is for March, and Walden points out the index is “down 2.5% from February. It’s also down 5.8% from February 2022.

“The news is not good for the state’s leading economic index,” he declared in an email. “There appear to be three options for the near-future economy: slow growth, no growth, or negative growth. Let’s hope door #1 – slow growth – is the one that eventually opens.”

Chart courtesy of Dr. Mike Walden

The report is designed to forecast the direction of the North Carolina economy, and Walden doesn’t like what he’s seeing.

“All components of the Index suggested a weaker upcoming state economy,” he writes in the report. “Compared to the previous month, seasonally-adjusted building permits were down almost 11%, and seasonally-adjusted initial jobless claims were up 30%. The numbers are clearly pointing to a slowing economy.”

No surprise there, he added, given trends in the national economy from inflation to supply chain and much more.

Earlier this month, UNC-Chapel Hill economist Dr. Gerald Cohen warned: “Hard landing’ coming for economy due to rising interest rates, banking crisis.”

A ‘turning point’ on jobs: Soft landing for economy or recession?

“But as has been debated all year, the big question is how slow. Will economic growth continue, but just at a slower pace? Or will slow growth become negative growth, which is the standard definition for a recession?

“With the inflation rate moderating, the Fed may let up on the interest rate brake, and hence save us from
a recession.

“Or, with layoffs up and household savings accounts down, it may be too late to avoid a recession.

“Either way, the economic ride will likely become bumpier. Hold on.”

NC index data courtesy of Dr. Mike Walden

About the index

The Index is composed of five components: 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, and average weekly earnings of all North Carolina employees in manufacturing. All data are seasonally-adjusted and modified for differences in prices levels where appropriate. Data are from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and ECRI, whose permission to use their Weekly Leading Index is greatly appreciated. All calculations are done by Dr. Michael Walden, and comments can be sent to michael_walden@ncsu.edu.