Cautious optimism for state economy

Crowd tackles discount prices at big stores

November 27, 2010 5:29:03 AM PST
A report by the state on the health of our economy shows promise, but one local economist says a hard look at the numbers might lead to a different conclusion.The latest report put out by the state on how we're doing economically does show good news in some areas.

It reveals the general fund revenue is on target and it shows a huge spike in sales tax revenue just in the last couple months.

However, some say North Carolina is still facing very difficult times.

NC State University economics professor Mike Walden says there are still signs that there is more to the latest economic numbers than the state is reporting.

"The economy is not fine, we're improving, but we're improving very slowly," he said.

The report does say, despite the good news, that the rebound isn't consistent with the current employment picture. It reveals employment remains weak and continues to grow slowly.

"The answer to why state revenues are looking a little better is because these gains are all from a very, very low base, a very dismal base than a year ago," Walden said.

Another number Walden says looks better than it really is, is unemployment. It's fallen from more than 11 percent, to around 9.5 percent.

"It may be a little misleading, because of how people are counted as unemployed," he said. "Over the last year, 50,000 people who are out of work have stopped looking for work. They say, 'Well gosh, I've beat the bushes I can't find jobs there's not work.' And so when they are asked by that surveyor, 'Are you actively looking for work, are you sending out resumes, going on job interviews,' they say, 'Well no, there's no work to be found.' Those folks, unfortunately, are not counted officially as unemployed."

Walden also points out that debt is down and savings are up. The problem with that is where people are saving, they're not spending and it's a consumer driven economy.

"If our consumers don't spend money, we're not going to have a robust economy," he said.

So many North Carolina residents may wonder what does that mean for sales as the season of spending kicks off?

Walden says Christmas sales are expected to rise 2 to 3 percent higher than last year, which is only a modest gain. When times were good, sales would sometimes go up by 6 to 8 percent.

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