After a year that they acknowledge has been divisive politically, Charlotte business leaders expressed guarded optimism Friday about the economy in the year ahead under a new presidential administration.
Speaking at the Charlotte Chamber’s annual economic outlook luncheon, Bank of America CEO Brian Moynihan cited the U.S.’s sustained economic growth as reason to remain hopeful.
The economy is in its 90th month of economic expansion, and employers have been adding an average of 180,000 jobs a month on average this year. It only takes about 60,000 a month to keep up with the growth of the labor force, noted Richmond Federal Reserve Bank President Jeffrey Lacker, another speaker.
“We have the largest economy in the world, and everyone is knocking on the door to get in,” Moynihan.
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This week the Fed raised short-term interest rates in a move that reflects growing confidence in the economy. Emboldened by recent progress – like the unemployment rate drop to 4.6 percent, a nine-year low – the central bank also said it anticipates three rate hikes in 2017.
Lacker, whose district includes the Carolinas, is not currently part of the Fed’s rate-setting panel but has pushed for higher rates to keep a lid on inflation. When asked about the number of hikes he anticipates in 2017, Lacker said: “My guess would be more than three.”
Still, executives said they remain wary about how some possible policy changes under President-Elect Donald Trump could affect local labor markets.
For example, Trump has said he intends to repeal and replace the Affordable Care Act, President Barack Obama’s signature health care program. But Susan DeVore, CEO of Charlotte-based Premier, said while repealing is easy in theory, replacing the program is a much more arduous task.
“I worry a little bit about this drunk disillusionment that we have right now, and the pendulum swinging so far one way or the other in people’s thoughts. So you repeal ACA, you think you can replace it and everybody’s excited about that and everybody thinks that’s going to happen quickly,” DeVore said.
There are questions that have to be addressed if any changes are made to the signature law, DeVore said. “How do we keep some of the things that worked, even if we need to re-brand them, re-boot it? And how do we change the things that didn’t work so well?”
DeVore and Duke Energy CEO Lynn Good also voiced concern about immigration, which could stifle recruiting of skilled workers. In addition to a promise to build a wall between the U.S. and Mexico, the president-elect has also vowed to crack down on the federal H1B visa programs that lets companies fill U.S. jobs with foreign workers.
“The pool of resources that we’re going to need for the next generation of clinical analytics, innovation, technology, cyber ... all those kinds of things that are really important in health care,” DeVore said.
Good also said immigration policy changes could weigh on infrastructure, a sector Trump has vowed to bolster.
“The workforce that you need in order to do these jobs are in high demand. If we accelerate infrastructure, there will be a workforce issue there as well,” Good said.
Trump is widely expected to reduce regulation in his administration. That, Moynihan said, could benefit mid-sized firms, which grappled with legislation like the Affordable Care Act.
“I heard a quote last week: The cheapest form of stimulus is optimism. The second cheapest is less regulation, and the perception that we can grow again,” said David Carroll, who leads Wells Fargo wealth and investment management unit.
Responding to questions about Trump’s criticism of the Fed as overly political, Lacker said he has never seen “any inkling reflective of political considerations.”
“It’s been my experience – and the (Fed meeting) transcript shows – that our considerations are about the economic well-being of Americans,” Lacker said.