Economic. Barometer. Recovery and Job Math. Turnaround in Real GDP Began in Mid

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1 Economic UNIVERSITY OF NORTH CAROLINA WILMINGTON CAMERON SCHOOL OF BUSINESS H. DAVID AND DIANE SWAIN CENTER FOR BUSINESS AND ECONOMIC SERVICES Inside this issue: National Unemployment Labor Compensation Corporate Profits Job Losses Over Barometer Volume II, Issue 2 Recovery and Job Math April 2010 The turnaround in output that began in mid-2009 is continuing into the current year. Consumption outlays, which were subdued in the second half of last year, have firmed in the opening months of this year, amid recovering wealth positions and an improving tone to the labor market. Moreover, business outlays on equipment and software have been perking up. Turnaround in Real GDP Began in Mid Regional Unemployment AARA Stimulus Funds Wilmington, NC Employment and Wages NC Home Sales 5 Room Occupancy Tax Collections ILM Air Passenger Traffic Port of Wilmington Container Tonnage Growth Rates Learn about our benefactors, H. David and Diane Swain at Despite steady expansion in output for more than half a year, employment finally turned up in March. While the March increase in employment of 162 thousand was a welcomed development, it was barely sufficient to avoid rising unemployment. First, private payrolls rose 123 thousand in March as one-off Census hiring added 48 thousand jobs nationally. Second, given underlying growth in the labor force of about 115 thousand per month, actual job growth has to match this or all the new entrants will not be absorbed and unemployment will rise.

2 Page 2 Economic Barometer National Unemployment Rate to Fall Slowly The national unemployment rate is likely to be declining sluggishly in the period ahead. This owes to several reasons. First, output growth is unlikely to exceed on a sustained basis the pace registered over the second half of last year a 4 percent annual rate. At this rate, the unemployment rate would fall ½ to ¾ percentage points per year. Second, many workers are currently working a reduced work week or were only able to find part-time employment. As businesses face the need to expand employment, many will be restoring hours of existing workers or hire workers currently working part time which does not lower the unemployment rate. Third, during the recession, many workers became discouraged and left the labor force and were not counted as unemployed. Improving labor market conditions will draw these people back into the labor force and they will either be counted as unemployed or take a job that otherwise would be taken by someone counted as unemployed. A final note: The household survey from which the unemployment rate is calculated is different from the establishment survey from which the job creation numbers are calculated, and the two do not match up very well over short periods of a few months or so. Labor Compensation Has Nearly Stalled Slack in the labor market is holding down growth in labor costs. Combined with brisk advances in productivity, anemic advances in labor compensation are boosting corporate bottom lines. Solid growth in corporate earnings and an easing of risk aversion toward holding stocks are helping to fuel higher share prices. This improvement in the equity market and some unwinding of the credit crunch will be lending support to the economic expansion.

3 Volume II, Issue 2 Page 3 Corporate Profits Have Rebounded Job Losses Over 2009 As has been well-documented, the most recent recession had strong impacts on area and state employment. The three counties of Brunswick, New Hanover, and Pender lost a combined 7,000 jobs over As a result, average monthly employment was at its lowest since Job Losses Previous Employment Low Brunswick County 1, New Hanover County 3, Pender County 1, North Carolina 502, Regional Unemployment Rates Remain Static Average monthly unemployment rates throughout Southeastern North Carolina, the state, and the nation rose over 2009, reaching a 25-year high. January 2010 seasonally adjusted rates are virtually the same as yearend 2009 rates. 14% 12% 10% 8% 6% 4% 2% 0% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Jan-10 Source: NC Employment Security Commission; Bureau of Labor Statistics, US Department of Labor. Brunswick New Hanover Pender NC US

4 Page 4 Economic Barometer ARRA Stimulus Funds (Committed) 12/02/2009 Brunswick New Hanover Pender Area $ Area $ Area $ Hwy/Bridge Repairs 33,143,601 Une Insurance 26,120,105 Une Insurance 6,980,432 Une Insurance 13,417,526 Federal Awards 16,590,184 Safety Net 3,500,799 Safety Net 8,959,799 Edu Stabilization 13,631,739 Drinking Water 3,083,792 Drinking Water 7,940,230 Safety Net 12,079,664 School Districts 2,707,179 Federal Awards 6,279,553 School Districts 10,516,795 Public Safety Stab 2,366,186 School Districts 5,361,687 Drinking Water 6,035,290 Edu Stabilization 2,138,820 Edu Stabilization 3,420,904 Justice/Public Safety 3,301,491 Federal Awards 938,000 Weatherization 1,132,409 Housing/Com Dev 3,291,817 Com Services 704,004 Public Safety Stab 1,085,307 Pub Safety Stab 3,163,918 Weatherization 646,075 Human Services 774,694 Transit/Rail/Air 2,486,014 Hwy/Brdge Repairs 500,000 Total 83,431,823 Total 109,383,487 Total 24,135,142 Source: As of early December 2009, a total of $216.9 million in funding from the 2009 American Recovery and Reinvestment Act (federal stimulus legislation) had been committed to Brunswick, New Hanover, and Pender Counties. The underlined areas are common to the three counties. Funds designated for educational support and income assistance account for more than half of the funding. Wilmington, NC, MSA 3Q2009 Employment and Wages Average Weekly Wage Sector % of Total Employment Employment Change from 3Q08 (%) Wage % of All-Sector Average Health Care/Social Assist $ Retail Trade $ Acc/Food Services $ Local Government $ Educational Services $ Construction $ Public Administration $ Manufacturing $1, Prof/Technical Services $1, Adm/Waste Services $ All Sectors $ Source: NC Employment Security Commission. Among the ten largest employment sectors in the three-county area (Wilmington MSA), only two sectors, health care and social assistance and public administration, showed employment gains between the third quarter of 2008 and the third quarter of Construction and manufacturing were especially hard hit.

5 Volume II, Issue 2 Page 5 Sales of Existing Single-Family Structures (5-Month Centered Moving Average) WRAR BCAR WRAR BCAR 0 Source: NC Association of Realtors. Average monthly sales of existing single-family structures in Brunswick County (BCAR) reached a low point in late 2006, followed by a second low in late The 2006 low was followed by a rebound through the middle of 2007, only to be offset by a decrease through the end of the year. There was a similar pattern over There was growth over most of Wilmington area sales (WRAR) reached a low in late 2008, with growth following and continuing through the present. New Hanover County Room Occupancy Tax Collections Growth Rates (NSA) 200.0% 150.0% 100.0% 50.0% 0.0% -50.0% % 2Q08/1Q08 2Q08/3Q08 3Q08/4Q08 4Q08/1Q09 1Q09/2Q09 2Q09/3Q09 3Q08/4Q09 Source: New Hanover County, NC, Finance Office. Collections from the two 3% room occupancy taxes levied in New Hanover County are following a typical pattern, with growth during the middle of the year and declines at other times. On a 12-month moving total basis, tax collections have been falling since the third quarter of 2008.

6 H. David and Diane Swain Center for Business and Economic Services ILM Air Passenger Traffic Growth Rates H. DAVID AND DIANE SWAIN CENTER FOR BUSINESS AND ECONOMIC SERVICES Computer Information Systems Building, Suite 1004 University of North Carolina Wilmington 601 South College Road Wilmington, N.C Phone: Fax: % 20% 10% 0% -10% -20% (209) 12(210) Source: Wilmington International Airport. Boardings Deboardings Passenger boardings and deboardings at the Wilmington International Airport (ILM) fell over 2008 and For the year ending February 2010, both passenger boardings and deboardings are unchanged from their comparable year-earlier levels. Port of Wilmington Container Tonnage Growth Rates Dr. Rosemary DePaolo Chancellor, UNCW Larry Clark Dean, Cameron School of Business Dr. William Sackley Director of SCBES 60% 50% 40% 30% 20% 10% 0% -10% -20% 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Container tonnage passing through the state port facilities at Wilmington rose throughout 2009, with especially strong growth during the second quarter of the year. Dr. William (Woody) Hall Senior Economist -30% Source: NC State Ports Authority. Dr. Thomas Simpson Executive in Residence Jonathan Rowe Program Director Jennifer Mackethan Administrative Assistant Crystal Cassarino Graduate Research Assistant The H. David and Diane Swain Center for Business and Economic Services at UNC Wilmington is the business research and outreach division for the Cameron School of Business. Center staff collect and analyze local, state, and national economic data that impact our region and its growth. The H. David and Diane Swain Center for Business and Economic Services also provides professional and executive educational opportunities for organizations and professionals with major emphasis on business training, entrepreneurship and real estate. For more information about The H. David and Diane Swain Center for Business and Economic Services, visit our Web site, or contact Jennifer Mackethan at