The North Carolina economy is expected to decline both this year and in 2009, a prominent economist says, though a recovery could start by the second quarter of next year.
North Carolina’s economy is expected to decline by 0.2 percent this year, bringing an end to an expansion that began seven years ago, according to John Connaughton of the University of North Carolina at Charlotte. Connaughton says the N.C. economy will lose 58,100 jobs this year.
The recession will extend into 2009, Connaughton says. He predicts a 0.2 percent drop in the state’s economy and a net loss of 37,800 jobs. But in the second quarter of 2009, growth should start again, with the gross state product in the quarter advancing by 1.4 percent on an annualized, inflation-adjusted basis.
The state economy grew by 2.4 percent in 2007, according to Connaughton's figures.
The state’s most vulnerable sectors are finance and real estate, manufacturing and mining.
Connaughton’s latest quarterly forecast is in marked contrast to his predictions in September. That’s when he said the state’s economy should expand by 1.7 percent this year and see an increase of 23,920 jobs.
He also forecast economic expansion of 2.5 percent in 2009 with a net gain of 51,200 jobs.
He projected the strongest employment growth in services, finance and real estate, and wholesale trade.
“Both the residential construction industry and the financial sector have been reeling for the past six months,” Connaughton says in his latest forecast. “In addition, a number of other sectors are beginning to suffer as the economy sinks deeper into recession. Both manufacturing and retail trade are beginning to feel the effects of the overall slowdown.”
He says the only bright spot is the decline in oil prices, which could put cash back into consumers’ pockets.
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