Charlotte and the nation can expect slow economic growth next year as the nations businesses struggle with weak consumer spending and uncertainty about state and federal policy on taxes, health care and other issues.
That was the consensus Monday as a Federal Reserve official joined executives from some of Charlottes biggest corporations for the Charlotte Chambers annual Economic Outlook Conference.
Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, Va., said he expects the nations real gross domestic product growth the broadest measure of overall economic activity to come in at just above 2 percent for 2014. Thats about the same rate as the previous three years.
Its much lower, he noted, than the 3.3 percent growth rate the nation averaged from 1983 to 2007.
Yes, 2 percent growth is disappointing, Lacker said. But productivity is rising, incomes are growing and innovation is occurring.
He said post-recession caution among households and businesses is slowing the recovery.
Real consumer spending has slowed in recent years, Lacker said, and businesses have been reluctant to invest and hire new workers. He added that the disorderly implementation of the Affordable Care Act and the ongoing fiscal drama between Republicans and Democrats in Washington, D.C., arent helping the situation.
David Carroll, a Charlotte-based senior executive vice president for Wells Fargo, said corporate balance sheets are stronger than theyve been in years; but workforce participation rates remain too low, wages are going up too slowly and consumers are losing purchasing power.
He also had sharp words about the situation in Washington, where he said necessary reforms on issues such as entitlements and immigration are going untended.
Theres a complete lack of any coherent fiscal policy, he said.
Whats happening in the capital casts a constant pall over the whole economy, Carroll added. Its been a train wreck.
He added later that he hoped the recent situation at the airport doesnt typify the way city and state leaders will handle regional disagreements in the future.
City officials have been wrestling for months with state lawmakers over whether the city should continue to control Charlotte Douglas International Airport or whether a regional commission should run it.
The Federal Aviation Administration hasnt made a definitive ruling on the matter.
Bank of America CEO Brian Moynihan said improved housing and improved consumer spending leave him believing that the economys in a better place than last year. However, he agreed that too much uncertainty remains, and businesses are staying cautious.
Weve got a race going, but were under the caution flag. Weve got to get the caution flag put away, Moynihan said.
Tim Belk, CEO of Belk Inc., said the companys stores had strong sales in October and November, but the year overall has been more uneven than expected.
Its been a little choppier, a little harder to predict, he said.
Belk also said the company plans to plot a more conservative course next year.
Chris Kearney, CEO of Charlotte-based diversified manufacturer SPX, said his firm has seen some encouraging trends, but overall he expects tepid growth in the low single digits for 2014.
Given where weve come from in the Great Recession, well take it, he said.
Gov. Pat McCrory also addressed the gathering, noting that the states economy is improving and its unemployment rate, once the fifth-highest in the country, has dropped from 9.4 percent in January to 8 percent now.
He pointed to efforts to lower the corporate tax rate, revamp the unemployment system and make the state more aggressive in economic development.
The competition is tough, McCrory said, mentioning conversations hes had with governors John Kasich of Ohio and Nikki Haley of South Carolina.
Weve got to anticipate what theyre doing and be two steps ahead of them, he said.
In other news during the conference:
• Lacker said he expects the Federal Open Markets Committee during its meeting next week to discuss the possibility of tapering its bond-buying stimulus program.
He said he hasnt been a supporter of the asset purchase program and believes monetary stimulus could have only limited effects because economic growth seems to be driven mainly by population and productivity growth.
• Susan Devore, CEO of Charlotte-based healthcare company Premier Inc., said hiring in the health care sector has slowed amidst the confusion surrounding the botched rollout of the Affordable Care Act.
She also said that earlier projections called for 9 million people to be enrolled in 2014, but thats been lowered to 7 million after the troubled website malfunctioned in the initial sign-up days. Officials say the repaired site is working better now.
Still, Devore said that for states like North Carolina, which opted not to expand its Medicaid program and must rely on the federal insurance exchanges, it could mean real economic challenges.
• Lloyd Yates, an executive vice president with Duke Energy, said his company is grappling with a new normal in which manufacturing plants are using 40 percent less electricity and homes are switching to energy-saving light bulbs.
He said Duke is expecting gross domestic product growth of about 2.5 percent next year. Wed be willing to go higher, he said, but the uncertainty in Washington warrants caution. Staff Writer Rick Rothacker contributed.
Frazier: 704-358-5145; Twitter: @ericfraz
The Charlotte Observer welcomes your comments on news of the day. The more voices engaged in conversation, the better for us all, but do keep it civil. Please refrain from profanity, obscenity, spam, name-calling or attacking others for their views.
Have a news tip? You can send it to a local news editor; email firstname.lastname@example.org to send us your tip - or - consider joining the Public Insight Network and become a source for The Charlotte Observer.Read moreRead less