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Economic Forecast: Regional Economy To Grow At Slower Pace This Year

By Christina Haley O'Neal, posted Jan 11, 2018
The regional economy has somewhat recovered from the Great Recession 10 years ago. The area economy, however, could be trending at a less accelerated pace of growth in 2018.

That was the sentiment shared by economists at the 26th Annual Economic Forecast, presented Thursday by RSM, the Wilmington Chamber of Commerce and Wilmington Business Development at the Wilmington Convention Center.

What the region could see in 2018 is a return to a normal, more traditional pace of growth than from what the region has seen in previous years, according to Adam Jones, regional economist and professor at the University of North Carolina Wilmington.

That growth will likely come from productivity and from more people moving to the region, he said.

The region is going to outperform the national economy because of the increase in population, which will grow at a faster rate than the national population. In addition, productivity will roughly be in line with the nation, he said.

Over the past year, the local economy has seen a change in rhetoric reflected in business and consumer confidence, he said. State and local policy that was hampering growth has improved, including HB2, which was partially repealed, and the shifts in local government to fix and streamline regulations are boosting potential going forward, he said. 

A more positive mood among business and consumers is helping drive the economy, he said.

"Labor markets are tightening. Uncertainty is waining ... and we are poised for some growth," Jones said. "We have removed the obstacles that were in front of us and the winds are at our back."

Consumers in the region are feeling more confident, and going forward, growth is going to come from Brunswick and Pender counties, which has more land available than New Hanover County, Jones said.

He predicts businesses will remain optimistic in 2018. Layoffs in the region are low and home prices are going up, which suggests that consumers in the area are still confident.

The regional growth has also been “eating through the surplus labor and reducing the unemployment rate," he said, adding that it may be a positive sign that in some areas, the labor force is meeting business requirements.

“Business is stacking back up and we are hitting our stride again," Jones said about regional employment.

The Wilmington region has seen 8 percent more jobs than the area had prior to the recession, according to Richard Kaglic, a senior regional economist with the Federal Reserve Bank of Richmond, Charlotte Branch, who also presented during the economic forecast. "That is kind of an anomaly for eastern North Carolina," he said.

Increased wages are also going to boost that regional consumption, he said. But the average in wage growth, while better, has slowed, Jones said.

"We can see that wages have increased, but what has happened and what is keeping that average going up is that we have created a lot of tourism jobs, a lot of leisure and hospitality jobs that don't pay as much as some of the other sectors," Jones said.

Infrastructure development is also playing a part in a strong economic outlook, with business support in the region increasing through regional development including hotels, new roadways, parks and educational institutions. 

"There is a lot of capacity being built within this community to support a business center and that is positive for the future," he said. 

Jones did, however, leave some room for caution in becoming too optimistic about the economy, which, if not performing as expected, could experience a pullback, he said.

Growing pains might also show in surrounding areas, including Pender and Brunswick counties, with residential growth posing "some interesting challenges" for those communities, he said.

"We think of this area as Wilmington. But it's not all politically Wilmington," Jones said. "All of these counties function together for most of us, but they don't function together from a taxing standpoint. They don't function together from a school standpoint. And as the residential growth drives inward, that's going to put pressure on the Pender County and Brunswick County budgets. There's going to be some challenges there." 

There is still reason for optimism for the region's future, Jones said. 

"This region is beginning to talk with itself more and more. I see collaboration; that's positive. I see economic signs that are positive," he said. "We are going to grow next year. We're going to outperform the national economy."
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