The Cary Chamber got the jump on the 2020 economic forecasts this morning at a breakfast presentation with NCSU economist Mike Walden, PhD.
The forecast was decidedly rosy, with indications that the current expansion should continue throughout this year. Unlike the 2019 forecast when there was talk about 2020 being the year of the slowdown, 2021 wasn’t even mentioned.
Some key take-aways included:
- Unemployment is at a 50-year low.
- Wages are starting to rise. Low-wage workers are getting the biggest pay raises.
- Inverted yield curve is back to normal (does that make it a verted yield curve?). With its return to normal, the outlook for recession has lessened.
- The soon-to-be-ratified USMCA (US-Mexico-Canada Agreement) should benefit North Carolina dairy and auto parts industries. Dairy will benefit from the Canadian market accepting more imports, and auto parts will benefit partially due to Mexico’s agreement to raise domestic auto-part manufacturing wages making NC wages more competitive.
- The US/China trade negotiations are making slow progress. However, Dr. Walden cautions against any champagne popping since China has reneged on implementation in the past.
- US labor force participation is not back to historic levels, partially due to personal choice and partially due to those unable to work. An estimated 2.4 million individuals can’t work due to opioid addiction.
- We’re in a Goldilocks economy — low inflation combined with low unemployment.
- Wage inequality continues. In NC, high-wage jobs and low-wage jobs are the fastest growing. Middle-wage jobs are lagging.
So, what might cause a slowdown?
- Stock market continues to roar. Is everyone getting too optimistic? Price-earnings ratio has risen – watch carefully for signs of overheating.
- Business debt is up – if spending slows, businesses holding too much debt could be in a world of hurt.
Overall outlook? Continued steady, if slow, growth.
Breathe a sigh of relief.