A UNC Charlotte economist anticipates continued strengthening of the labor market in North Carolina and sees the state’s economy growing at 2.5 percent for the year with the current U.S. economic expansion lasting at least an additional 18 months.
John Connaughton gave his quarterly update on the North Carolina and national economy Wednesday at UNC Charlotte’s Center City campus. His talk centered on the uncertainty over when the Federal Reserve will raise interest rates – uncertainty that was heightened after the economy contracted in the first quarter.
Economists attributed the 0.7 percent contraction to the heavy snow that saddled the Northeast. North Carolina, less affected by the wintry weather, grew at a projected 1.6 percent in the first quarter.
Connaughton did cite oil prices and the strong dollar as cause for concern.
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North Carolina’s seasonally adjusted unemployment rate ticked up to 5.5 percent in April, just above the national average.
But that’s good news, Connaughton said. It’s a sign of discouraged workers entering the marketplace again. “It now appears to them to be enough for them to take the risk. That’s a good thing.” Traditional unemployment figures don’t take into account people who have stopped looking for work.
Connaughton said a few months of steady job growth should bring the unemployment rate to 5 percent by the end of the year, and North Carolina should add an estimated 82,100 jobs in 2015, after adding 110,200 jobs the year before. The unemployment rate in North Carolina topped out at 11.4 percent in the first quarter of 2010.
A weak European economy is the reason for an appreciating dollar, which is good news for Americans traveling abroad, but bad for U.S. companies in the export buisness.
Connaughton said Boeing and BMW, with their heavy manufacturing presence in South Carolina, are probably already feeling the pinch because their dollar-denominated goods are now less affordable abroad.
Connaughton said stable oil prices could give the current period of economic expansion some extra legs, if they stay between $60 and $70 a barrel.
He said gas prices should dip to their early-2015 lows in the fall, but things should stay steady at the pump in the meantime.
2015 forecast for notable sectors of the N.C. economy
According to the Babson Capital/ UNC Charlotte Economic Forecast, here’s the projected 2015 growth for five key areas of the economy.
% of total
Gross State Product
Finance, Insurance and Real Estate
Business and Professional Services