This Insights article was contributed by Dr. Adam Jones, Cameron's Regional Economist.
T’was the last month of the year and all through the nation,
folks are dreaming, of a politics-free holiday vacation;
The country was employed and the u-rate very low 1,
with a strong outlook, as layoff data show 2;
Our children asleep, comfy in their beds,
With visions of iPads and YouTube, playing in their heads;
But mama with her coffee, and I in my ballcap,
Stay up marveling, at a positive output gap 3!
When up on my phone, pops a new tweet,
A new tariff policy, and I was quickly on my feet;
Away to Google I flew like a flash,
In hopes of news that rates, would soon be slashed 4.
When what to my wondering eyes should appear,
But a labor market strong anyway, in the face of fear 5,
With a “Fed of action” following a market howl
I knew in a moment, it must be Saint Powell 6;
With bad news dismissed, often as transitory 7,
Each data release helped to show us the story;
Up home sales and prices adjusted for season 8,
A slower story locally with tariff disruptions the reason 9;
Output has slowed but economists remain at peace 10,
As full employment means wages, finally, increase 11;
Despite uncertainty, businesses march on,
Productivity growth is starting to dawn 12;
Forward we go with hearts of cheer,
Watching holiday sales for signs, of another good year!
1. The unemployment rate continues to hover near record lows of less than 4 percent
2. Initial claims for unemployment remain low both nationally and in North Carolina
3. A positive output gap means that US output exceeds estimates of sustainable output (the economy is cranking!). When actual output equals our “potential, economists say the economy is at full employment, when actual output exceeds potential economists believe that growth will slow as resources are stretched and we growth is unsustainable at that rate.
4. The Fed cut interest rates three times in 2019 before signaling a pause but some market signals suggest an expectation of more cuts.
5. Unemployment rates are low, despite unusually high levels of economic policy uncertainty, especially surrounding trade policy.
6. Jerome Powell is the Chairman of the Fed and has overseen rate cuts during the economic expansion this year, an accommodative move from the Fed.
7. Fed Chairman Jerome Powell described low inflation as likely “transitory,” not “persistent.” https://www.cnbc.com/2019/05/01/heres-the-one-word-from-jerome-powell-that-has-people-raising-their-eyebrows.html
8. New and existing single family home sales have increased over the second half of 2019 according to NAR data and the Case-Shiller home Price index is up 2.1 percent nationally from a year ago.
9. Unemployment declines in the region have slowed slightly and even ticked up in the first half of 2019 in North Carolina. Many attribute the slowdown to retaliatory tariffs in the trade war.
10. The Wall Street Journal’s Economic Forecaster Survey is predicting growth for 2020, albeit slower at at around 1.7 percent
11. Wage growth remains less than what many might predict but were up nationally 3 percent YoY for the last several months
12. Productivity growth has been sluggish for the last decade or more but in the last year, while still sluggish by historical standards, has picked up slightly. Many economists believe that as the labor market tightens, productivity will necessarily pick up. Growth can come from more workers or more output per worker, as workers are harder to find, productivity will become an area of focus.
Robert T. Burrus, Jr., Ph.D., is the dean of the Cameron School of Business at the University of North Carolina Wilmington, named in June 2015. Burrus joined the UNCW faculty in 1998. Prior to his current position, Burrus was interim dean, associate dean of undergraduate studies and the chair of the department of economics and finance. Burrus earned a Ph.D. and a master’s degree in economics from the University of Virginia and a bachelor’s degree in mathematical economics from Wake Forest University. The Cameron School of Business has approximately 60 full-time faculty members and 20 administrative and staff members. The AACSB-accredited business school currently enrolls approximately 2,000 undergraduate students in three degree programs and 200 graduate students in four degree programs. The school also houses the prestigious Cameron Executive Network, a group of more than 200 retired and practicing executives that provide one-on-one mentoring for Cameron students. To learn more about the Cameron School of Business, please visit http://csb.uncw.edu/. Questions and comments can be sent to [email protected].
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