North Carolina’s economy is expected to continue to grow in 2016 and 2017, but at a slower rate in years past, in part due to a decline in consumer confidence says UNC Charlotte economist John Connaughton.
In Connaughton’s second quarter Babson Capital Management/ UNC Charlotte economic forecast on Thursday, he discussed his projections for the state’s economic growth in 2017 for the first time.
Connaughton says that he expects North Carolina’s Gross State Product (GSP) to increase at a 2 percent annualized growth rate in 2017.
This is less than his projection for North Carolina’s GSP in 2016 of 2.1 percent, and below the state’s actual GSP in 2015 of 2.9 percent.
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“We do know there is a certain limit in the length the economy can go before it slows down” said Connaughton.
Connaughton cautions that the state’s economic growth could slow in 2017 because of declining consumer confidence, the national debt and the Federal Reserve’s decision to raise interest rates.
The Conference Board’s Consumer Confidence Index, a gauge of how consumers feel about the United States economy, declined to 92.6 percent in May from 94.7 percent in April.
“I’m a little bit concerned about consumer confidence going forward,” said Connaughton. “I’m not sure what it is, maybe it’s the election, but its at its lowest level in six months.”
By the end of 2017, Connaughton says that employment in North Carolina will increase by 2.5 percent with total employment equaling 4.5 million people.
The economy is expected to add 109,600 jobs in 2017, with the construction sector seeing one of the biggest percentage increases in employment in 2017 growing 5.9 percent with an increase of 218,300 people.
Connaughton projects the unemployment rate will drop to 5.4 percent in 2017, which is below the most recent unemployment rate in April 2015 of 5.0 percent.
He was also asked during the presentation about the potential impact that N.C. House Bill 2 will have on economic growth in future years, but Connaughton says it will be hard to measure the exact impact of the bill and it is not factored into the 2 percent annualized growth rate in 2017.
“The thing we don’t know is all the companies over x number of years that just won’t consider North Carolina and what that number is going to be,” said Connaughton.