The North Carolina economy is slowly showing signs of strength, according to Walker College banking professor Dr. Harry Davis. The jobless rate is falling and indications are that's a trend that will continue.  

Davis, who teaches at Appalachian State University in Boone, thinks the 2011 state domestic product will climb by 2.75 percent over 2010 levels. Meanwhile, he projects that unemployment, now nearly 10 percent, will drop to 8.9 percent by year’s end.

The economy is finally beginning to show signs of sufficient growth to be called an expansion,” says Davis, referring to the national economic picture, where he expects growth of 3.5 percent in 2011 and a decline in joblessnes to around 8 percent by year’s end.

NCTechNews elaborates on his theme. 

Consumer spending has recently become a bright spot for the economy. It has been growing at an annualized rate of about 4% for the past several months. Fortunately, most of the growth is coming out of income and savings instead of increases in consumer debt. Consumers continue to deleverage with the ratio of household debt to income falling from a high of 131% in 2007 to 116% at the end of 2010. Indeed, consumer debt fell monthly for nearly two years till October of last year. The savings rate remains in the 4-5% range.

GoDanRiver.com has more details on Davis' comments.

Davis also touched on unemployment numbers for the state. He called the unemployment problem a structural one, which he said is much harder to fix than a cyclical unemployment problem.

“For the people who lost their jobs in construction – those jobs aren’t coming back,” he said. “They’re going to have to do something else, and that’s a structural problem. No matter how fast the economy grows, it’s not going to pick up those people. They may have to get new training, or change their geography and move somewhere else to get a job. This is more difficult to deal with than a cyclical problem where jobs go up when the economy goes up and jobs go down with the economy does.”

Walker College banking professor and North Carolina Banking Association economist Dr. Harry Davis has released his latest Business Barometer. He looks at the economic trends from the past few months and gives his best guess as to what will come.

The numbers are as bad as they will get and will improve from here. We should avoid a double-dip. Unfortunately, the economy continues to bounce along the bottom with little growth expected before next year.

A “douple dip” recession is defined as a period when “gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.” Davis, along with economists, say the first recession ended in May 2009. Since then several economic indicators have shown growth, as Davis outlines today.

After good numbers in the spring, most measures of economic performance turned south in June and July. Consumer confidence started falling in June after rising since February. The ISM Index, which is a measure of manufacturing activity, plunged in June after rising earlier in the year.

New home sales crashed in June and July to the lowest levels since the inception of the statistic. Consumer credit has been falling for 11 out of the last 12 months as consumers try to reduce their debt burdens. Consumers have now reduced consumer credit by $114 billion since the recession started.

The economy is only growing at an annualized rate of about 2-2.5 percent. That rate is not nearly fast enough to significantly improve the employment situation.

According to the Commerce Department, that growth has slowed significantly. Today it released its revised GDP number for the second quarter of 2010.

Gross domestic product — the broadest measure of the economy’s health — expanded at a feeble 1.7 percent annual rate in the April-June quarter, The Commerce Department reported Thursday. …

The second quarter estimate is a sharp slowdown from a 3.7 percent growth rate logged in the first quarter.

Many economists don’t expect economic growth to improve much during the July-September quarter or in the final quarter of this year. Unemployment – now at 9.6 percent – is expected to stay high or even rise in the coming months.

To underscore Davis’ point, earlier this month CNN reported that a majority of economists do not foresee a double-dip and believe there will be little growth the remainder of 2010.

The week the Daily Tar Heel profiled Atul Bhula, the new president of the UNC Association of Student Governments. He is enrolled in the MBA program at Walker College.

But Bhula’s priorities might be overshadowed by criticism from some students who think the organization has been ineffective.

“I think it has great potential,” said Rick Ingram, an ASG delegate from UNC. “Hopefully, Atul can expand ASG’s reach to each of the campuses and make it more useful as an entity.”

Bhula said he hopes to address some of this criticism by cutting costs and reaching out to the student body.

He said he will plan ASG outings on different campuses where more students can connect with the association, which would help its image and allow for better communication between the student body and the organization.

Walker College banking professor and NC Bankers' Association economist has released his latest "Business Barometer." It's a column defining current economic trends and his expectations for the future. The headline is, "When is an economic recovery not a recovery?"

An excerpt:

Corporations are sitting on huge amounts of cash because they are not willing to invest in plant and equipment. The level of cash to assets is at the highest level since 1963 when the statistic began.

Businesses of all sizes are concerned about future tax policy and are thus delaying hiring of new workers.

Small businesses cannot get credit due to tighter lending standards which are being forced on banks by the bank regulators.

States are expected to have a total shortfall of about $150 billion this fiscal year. While Washington will likely help with about $25 billion, the remaining shortfall means large budget cuts in most states.

Public sector workers are now joining private sector workers in the unemployment line.