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Economist predicts recession to linger through 2009

July 07, 2009

Note to Editors: Mike Walden's Economic Outlook includes economic forecasts for seven regions of the state: Charlotte, Piedmont Triad, West, East, Northeast, Southeast and Research Triangle. The Economic Outlook, including the regional forecasts, is on line at
http://www.ag-econ.ncsu.edu/faculty/walden/publications/outlooknc/ncoutlooksummer09.pdf. Previous Economic Outlooks and other information are available at
http://www.ag-econ.ncsu.edu/faculty/walden/walden.htm

Media Contact: Dr. Mike Walden, William Neal Reynolds professor and North Carolina Cooperative Extension economist, North Carolina State University, 919.515.4671 or michael_walden@ncsu.edu

The pain caused by the worst economic downturn since the Great Depression will continue for the rest of the year, according to a forecast by a North Carolina State University economist.

The best that can be said for the last six months of 2009 is that economic conditions will continue to worsen at a slower pace than during the first half of the year, says Dr. Mike Walden, William Neal Reynolds professor and North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State.

Walden prepares an economic outlook for the state every six months. In his North Carolina Economic Outlook: Summer 2009, he forecasts that the state and national economy will finally start to turn around early in 2010. But until then, conditions will continue to worsen.

Walden sees North Carolina's unemployment rate, now at just over 11 percent, peaking at 13 percent early in 2010 before gradually improving throughout the coming year. The state's unemployment rate, which is now 2 percentage points higher than the national rate, will decline faster than the national rate and will equal the national rate in late 2010, Walden predicts. Yet even then, in the last quarter of 2010, North Carolina unemployment will be around 10 percent.

North Carolina has lost 240,000 jobs since the recession began in late 2007, Walden says in the report. He adds that with the exception of the government, leisure/hospitality, and education/health sectors, the state has seen job losses in every economic sector.

"The losses in construction have been particularly large - almost two-thirds greater on a percentage basis in North Carolina than in the nation. This reflects the significant expansion in real estate and construction in the state during the real estate boom of the early and mid 2000s, and then the tremendous pullback in that sector as the real estate bust materialized in late 2007 and early 2008," Walden writes.

The housing market, where the recession began, holds the key to recovery, according to Walden. The economist writes that while home sales remain weak, "deterioration in sales appears to have stopped at the national level, although it is too early to make the same conclusion for North Carolina."

Walden's Economic Outlook is available on line at
http://www.ag-econ.ncsu.edu/faculty/walden/publications/outlooknc/ncoutlooksummer09.pdf

Written by: Dave Caldwell, 919.513.3127 or dave_caldwell@ncsu.edu

Posted by Dave at July 7, 2009 11:05 AM