The Wilmington area’s economy is expected to grow by a moderate 2.5 percent this year, a regional economist predicted Thursday.
“We’re going to end up growing slightly faster than the national average – so not a banner year, but not a bad year,” said Adam Jones, regional economist at the University of North Carolina Wilmington, to a crowd attending an economic forecast event Thursday morning at the Wilmington Convention Center. “I think we’re going to continue to see improvements in labor markets. We should see some upward pressure on wages and hopefully set ourselves up for continued growth into the future.”
Jones and Richard Kaglic, senior regional economist at the Charlotte branch of the Federal Reserve Bank of Richmond, spoke during the 24th annual Economic Forecast hosted by McGladrey, the Wilmington Chamber of Commerce and Wilmington Business Development.
While regional unemployment has been on a steady decline except for a slight increase in some of the most recent local data, growth in higher paying sectors remains a concern, Jones said. A decline in manufacturing jobs is often brought up when discussing the issue, but that decrease doesn’t represent the whole picture, he explained.
“Why is manufacturing important? I think what we really mean is we want good jobs. We want high-paying jobs,” Jones said. “If you listen to the rhetoric, we hear some about manufacturing, but we’re hearing more and more about STEM – science, technology, engineering and math. Well, what are STEM jobs? They’re good-paying jobs. So I’m not necessarily sure that the decline in manufacturing employment is the end of the world, but it’s certainly something we should be keeping an eye on.”
What Kaglic called an “upward drift” in home sales in the nation also applies to the Wilmington area, and Jones said those sales bode well for the future.
“What the increase in home sales tells me is that households are starting to think about the long game again,” Jones said.
He said the hope is for levels of business spending will catch up with an upswing in investment and spending by households.
Part of the concern surrounding the need for higher wages in the region is the cost of housing, a topic an audience member brought up at the end of Thursday’s event. Angela MacKinnon, business development manager for YS Companies, asked the economists whether they see the imbalance between wages and the cost of housing in Wilmington changing in the coming year, pointing out that regional wages here are lower than that of cities like Raleigh.
“No, for a couple of reasons,” Jones said. “Employment trends here are different than in Raleigh. We have a much larger leisure and hospitality sector and for better or worse ... the quality of life here is great. Many of us are willing to either give up a little on the wage or pay a premium for our housing for that. And for that reason, I think the trend will probably continue.”
In his portion of the forecast, Kaglic said education in North Carolina will pay a key role in future economic conditions. The state lags the nation and other states in degree attainment.
“While I do believe that North Carolina is well-situated to continue to thrive and maybe even grow at a somewhat faster pace than the national average in the near term, I think there’s some structural issues that are lying just below the surface that we need to look to. Most specifically, I think we’ve got to do a better job of preparing our workforce for the economy of the future so that they won’t be exposed to economic disruptions such as the Great Recession,” Kaglic said.
Even during the depths of that recession, unemployment for those with bachelor’s degrees or higher never dipped below 5 percent, he said.