Banks point to another sign of a possible recession
Here’s a sign the economy could be getting more unstable. Executives at Bank of America, Wells Fargo and JP Morgan Chase shared their thoughts on the state of the economy during recent quarterly earnings calls, and banks say they’re seeing customers starting to spend less.
For more, we turn now to Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: Tony, I thought the outlook was getting better because inflation is easing. Should I be worried again? I mean, what are these bank executives saying?
Tony Mecia: Well, Marshall, like a lot of things in life, there are contradictory signals. There are some things that bode well and some that bode not so well.
Inflation, I think, as you mentioned, is coming down from its peak. But what some bank executives said in their earnings calls last week was that they're starting to see some signs that consumers are starting to pull back a little bit. The rate of growth and spending is decreasing.
Consumers are maybe being a little more cautious with their money, which are things that you would tend to see at the start of a recession would be consumers pulling back. And now it doesn't mean that we're headed for recession necessarily, but everybody's sort of on the lookout for what are some different signs? What are some things that could happen?
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Terry: Most economists had been predicting a recession sometime this year. Is that still the case?
Mecia: I think that is still the case. The Wall Street Journal regularly polls economists and a majority of them do foresee a recession of some sort this year. Now, that's largely because the Federal Reserve is going to be probably continuing to raise interest rates, and that ripples through a bunch of different economic sectors. We've seen it in housing. We've seen some layoffs in the tech sector. There are some signs that that's going to continue. And so what these bank executives are saying might be in line with that.
Terry: Now, something that Mecklenburg County residents can count on happening this year are new property tax valuations. And you report the revaluation this time around is coming at an unusual time. Why is that?
Mecia: Right. This is something that happens now every four years. The county reassesses all of the parcels, commercial and residential, in the county to try to determine the new value, and then everybody is taxed on that new value. And we've obviously seen a huge increase in property values overall over the last four years. So those values are going to go up.
The timing is a little tricky this year because a lot of experts think that we are just recently hit the peak of the housing market. And so the concern might be if those values go way up, you're taxed on that value. And then, for example, if your property decreases in value, which is something that hasn't happened around here lately, you know, are you going to be taxed on that higher value? So it's a little bit of an odd time. But, you know, the experts say this is something that needs to be done to get those valuations more in line with what the actual number is.
Terry: Now, this doesn't necessarily mean everyone's individual taxes will go up because the City Council and County Commission still have to set tax rates. Are there any signs that they're looking to raise tax rates this year after a few years of holding rates steady?
Mecia: Well, actually, I think what you're going to see is tax rates go down because the tax values are going to go up. The values have gone up so much, I think about 60% or so over a four-year period. Pretty much, anyone whose property has risen in value less than that amount, less than the 60% range over four years, they could very well see their taxes go down, the tax rate.
We don't know what the city and county are going to do on the tax rates, but I think we're going to see the overall tax rate go down. But yes, some people's taxes will go up, and some people's taxes will go down. It's really a rebalancing.
Terry: On to some transportation news now. You report that plans to widen Johnston Road and Ballantyne include some pretty big changes for drivers. So what are drivers facing and what are they saying about it?
Mecia: Well, that stretch of road that we're talking about is Johnston Road and Ballantyne, also known as U.S. 521. There's been a lot of traffic on that road, you know, connects into Indianland, South Carolina, which I think as we talked about last week, is booming.
And so there's a plan to widen that road starting in 2026. But what a lot of residents don't know or haven't learned until lately is that as part of that widening, the state is talking about making intersections in Ballantyne not able to turn left onto Johnston Road. They say that'll really increase the flow of traffic as they add lanes in each direction.
So some residents are concerned that that's going to make it a little tougher to get around if they can't turn left and have to turn right and then make a U-turn if they're headed in that direction.
Terry: And finally, Tony, leaders officially broke ground on Charlotte's first four-year medical school this week. Aside from training doctors, what are the big economic benefits that have development types excited about this?
Mecia: Well, it really goes beyond just the medical school. You know, the first class of the medical school is supposed to enroll in 2024. That's next year, I guess — now it's 2023. But it goes really beyond that.
They're talking of the district as an innovation district that they're calling the Pearl. Officials at Atrium are partnering with Wake Forest Baptist School of Medicine to do this. They talked about an innovation district that goes between here in Charlotte and Winston-Salem.
But really that area that they're in, the Midtown Dilworth area, they would like to see medical research, medical technology companies, that sort of thing. So that's really, I think, what has a lot of people excited just beyond the actual, you know, more doctors on the streets and in our hospitals.
Terry: All right, Tony, thank you.
Mecia: Thanks a lot, Marshall.
Support for WFAE's BizWorthy comes from Sharonview Federal Credit Union, UNC Charlotte's Belk College of Business and our listeners.