Economic rebound forecast for spring
The current U.S. recession has already gone on longer than either of the last two recessions in 1991 and 2001. But UNC Charlotte Economist John Connaughton says North Carolina appears to be weathering the downturn better than most, even with the current seven-percent unemployment rate. However, Connaughton predicts there will be more jobs lost in 2009. "The big impact here, in terms of job losses will be in the finance, insurance and real estate sector next year and all of those layoffs you've been hearing about - or being speculated on - start to in fact take place," says Connaughton. In North Carolina, Connaughton says the construction sector has suffered the most. By January, most of those losses will have already happened, while bank job losses will begin in earnest. This is the first year since 2001 that North Carolina's economy has actually declined. Unemployment is on the rise. Output is down in nearly all of the state's economic sectors. But Connaughton says a bit of good news has been lost in the gloom: Gas is nearly as cheap as it was in the 1990s. And every 50-cent drop at the pump puts $150 billion back in American pockets. Connaughton says that's led to a significant increase in discretionary income since October. "Put that together with more money in consumer pockets along with a fiscal stimulus package that should come along in the first quarter of this year - those are the reasons we think we're gonna actually stem this thing," says Connaughton. If the federal stimulus package is at least $500 billion - and if consumers start spending their money again - Connaughton says the economy should start to revive in Spring.