October 12th, 2011 7:26 AM by Lori Speight
Big businesses are sitting on billions in cash and remain reluctant to invest even though financing for them is favorable, said Thomas Simpson, executive in residence at UNCW's Cameron School of Business.
Financing is an issue for small businesses, and their sentiment, as he put it, is "in the tank."
Those factors have readily apparent effects here.
Will unemployment drop soon?
The Wilmington area's economic growth over the next year will exceed that for North Carolina and the nation, but it won't be enough to make a dent in unemployment, Simpson said. That was echoed by William "Woody" Hall, senior economist at the Swain Center for Business and Economic Services.
It takes a growth rate of about 3 percent for unemployment to stabilize, while local growth won't top 2.4 percent this year and 2.2 percent next year, Hall said.
Nationally, growth has been only half of a typical recovery, Simpson said.
Area unemployment in August was substantially higher than it was a year earlier. And Hall pointed out that those figures don't count so-called discouraged workers – those who have stopped looking for a job – or people working part-time when they would like to go full-time.
The real unemployment rate nationwide, he said, may be 70 percent higher than the number given out monthly by the U.S. Bureau of Labor Statistics.
Hall, who has been at UNCW for 37 years, said he has seen six recessions.
"If I look at the unemployment rate for the first five, there was not a single month that unemployment in North Carolina exceeded the national rate. If you look at this recession," he continued, "there has been only one month where the state rate was less than the nation."
"We were extremely hard hit," Hall said.
But Lt. Gov. Walter Dalton, who gave the conference's keynote speech, said North Carolina is positioned well as it comes out of the recession. He named three sources of job growth now: allied health, biotech, military and entrepreneurship.
Will home sales and prices rebound?
Home sales saw a precipitous drop from their peak around 2005.
In fact, sales plunged 72 percent here from their high point in 2005, Hall said.
Prices in the area covered by the Wilmington Regional Association of Realtors – New Hanover, Pender and northern Brunswick counties – dropped 25 percent. In Brunswick County, prices slid 35 percent, he said.
Simpson, speaking on the national outlook, was not encouraging about housing's outlook, saying housing statistics are "unlikely to improve any time soon."
There normally is four months worth of homes for sale across the nation. The figure is double that now, he said.
Simpson also said that housing starts are only one-fourth of their peak in 2005.
Is there positive news in the economy?
The residential real estate market appears to have stabilized after reaching its low point, Hall said.
During a real estate panel that followed the economic forecast, Intracoastal Realty agent Debbie Mitchell said that investors seem to be returning to the local market.
Sales of high-end properties – those $1 million and above – have risen substantially year to date compared with the same period a year earlier, Mitchell said.
Sales in Wrightsville Beach were up 40 percent and on Figure Eight Island, 50 percent, she said.
Mitchell said in an interview Monday that she hopes this is a sign that there are better things to come for the housing market as a whole.
Retail sales are up, Hall reported.
Sales have seen a "fairly healthy growth rate," but from their low point, they have risen only to about 2007 levels.
In tourism, "we're getting back to where we were" at mid-decade.
There was fairly healthy growth in the first quarter as measured by room occupancy tax receipts in New Hanover County, he said, pointing out that the increases had come in the off season.
Despite weak local and national growth, a survey of businesses in several economic sectors here expressed at least some optimism, led by health care, retail, and accommodations and food services. Even construction had only a "slightly negative" outlook.