Charlotte moves to the center of the political universe this week as the Democratic National Convention comes to town. Yet despite the glitzy upgrades, A-list guests and an election season largely focused on the economy, experts say the host citys recovery remains disappointing.
More than 48,000 people were looking for work in Mecklenburg County in July, the highest level since January. The local unemployment rate remains higher than the state and national average. Bankruptcy filings have ticked upward. And even a turnaround in Mecklenburgs housing market hasnt been enough to bolster consumer confidence amid continued uncertainty in the U.S. and abroad.
Decision-makers are just sort of sitting on their hands, Federal Reserve economist Rick Kaglic said. They dont know what the government is going to look like six months from now. They dont know what the tax and regulatory policy is going to be. I hear anecdotally there is more of a wait and see until after the elections attitude taking hold.
Area economists who weighed in recently on the local economy, two-thirds of the way through 2012, did find a few bright spots, from construction to financial services. But they dont expect the big picture to brighten much the rest of the year, they said.
Lacking the expected kick
Economic growth in the Charlotte area appears to have slowed in recent months, despite positive signs earlier this year, Kaglic said.
Thats due in part to continued weakness in the manufacturing sector, which saw a rebound in late 2011 and early 2012 but then reversed course as business owners remained reluctant to ramp up inventories and global economic growth stalled.
The well-documented problems that were seeing in Europe and the slower growth that were seeing in many of the other important parts of the world, like China and Brazil, are weighing on manufacturing activity in the Charlotte area, Kaglic said.
Charlottes recovery has disappointed by another measure, employment, with job growth slowing after some earlier gains, he said. Thats particularly true in the retail and hospitality sectors, suggesting consumer confidence remains weak.
Kaglic said spending in those sectors might improve as a result of the DNC. The convention has also boosted construction activity and created some temporary jobs, he said but otherwise, the event hasnt provided the economic jolt many predicted.
Were just not seeing the kind of kick that I expected, he said. I think thats really a function of the overall sentiment in the economy. Theres this tremendous amount of uncertainty.
The economist predicts an improvement after the presidential election, which will remove some of that uncertainty regardless of the results, he said. And he said some sectors, such as financial services, education and health care and trade, transportation and utilities, are performing well and creating jobs.
Still, Kaglic remains bearish on the Charlotte areas outlook for the rest of 2012.
I do not expect a sustained increase in activity after the election, he said. There may be a pop. ... But as we move forward, I think that conditions are going to remain relatively sluggish.
The story is, overall, somewhat downbeat.
Construction, retail show growth
Despite the slow overall growth, the Charlotte region is gaining momentum, Vitner said.
The numbers ... look depressing, but when you travel around, the economy feels better, he said. Were still not growing at the pace that we had become accustomed to prior to the recession, but the rate of improvement has accelerated and the recovery is more broadly based today than it was a year ago.
Construction activity has picked up in the months leading up to the DNC, for instance, and there is some cautious expansion under way in the retail sector. Restaurants are more crowded, and homes are selling more quickly.
On the whole, the Charlotte area seems to be recovering faster than the national rate, due to its still-growing population, a continued influx of new businesses and the fact that the region fell harder than other parts of the country during the recession, Vitner said.
Election could sway hiring
Meanwhile, the area continues to add jobs: Vitner expects as many as 25,000 new jobs for the year, up from about 20,000 in 2011.
Finance and professional and business services hiring has improved, due in part to a surge in temporary workers, he said. Wholesale trade and distribution is picking up, and construction has gone from a drag on the economy to be a slight positive.
Yet much of that improvement has occurred in the center city and surrounding neighborhoods, with job growth and other economic indicators lagging in the rest of the region. And while the areas recovery will continue, Vitner predicts a slowdown after the DNC.
A lot of projects had been accelerated to get them done beforehand, he said. After that, Im expecting businesses to be more cautious about hiring ahead of the election and focus more on the fiscal cliff and the uncertainty surrounding the presidential election.
Longer-term, though, the economist remains optimistic about Charlotte.
More and more, folks are getting used to the idea that were in a different environment today than we were in prior decades, and that as we move back to more normal growth whatever that normal pace of growth turns out to be its likely to be less than we saw in the past, he said. Its taking longer for households to reposition themselves to this new slower-growth environment than businesses, but we are making progress.