Triangle-area businesses exude confidence as US G.D.P. increased in final quarter of '22

Michael Perchick Image
Friday, January 27, 2023
Some Triangle businesses feeling confident at G.P.D. news
Businesses have had to navigate challenges across the course of the pandemic, from staffing shortages to supply chain delays to inflation.

The US gross domestic product increased by 2.9% over the final three months of 2022, marking the second straight quarter of growth.

"This is really pointing towards a positive direction, at least for the time being," said Nathan Goldman, an accounting professor at NC State's Poole College of Management.

"It is a good and strong report. It came in a little better than was anticipated. But we need a calm economy right now. We don't need the large swings we had coming out of the pandemic. And that 2.9% growth rate for the fourth quarter I think shows we have a stable economy - not too hot, not too cold," added Dr. Anne York, an economics professor at Meredith College.

Businesses have had to navigate challenges across the course of the pandemic, from staffing shortages to supply chain delays to inflation, the final metric continuing to loom large as the Federal Reserve considers future hikes.

"We've had to source out different vendors, sometimes we use grocery stores because we don't have to pay fuel surcharges," said Matt Vish, owner of Driftwood Cantina in Lafayette Village.

Vish said January is typically their slowest month, but sales have been robust thus far.

"Weather could play a part in it. I know last January we had a cold, kind of snowy month. And then also people getting more confident in the economy, feeling better about things, and coming out," Vish explained.

Driftwood Cantina is participating in Triangle Restaurant Week, in an effort to connect with new customers; Thursday, ABC11 saw a full table during the tail-end of lunch rush that said they came because of the promotion.

"It gives us a chance to show people what we can do," said Vish of the event, which runs through Sunday.

While the restaurant has had to raise prices to keep up with inflation, Vish said customers are largely understanding.

In the retail sector, sales fell by 1.1% in December, with the National Retail Federation reporting overall sales growth of 5.3% missed estimates of 6 to 8%. Despite the trend, TrunkShow in Raleigh said they ended 2022 on a high note.

"Each year it's gotten progressively better and this was our best year yet," said manager Laura Browning.

The boutique mall works with dozens of vendors, largely local, allowing them to bypass most supply chain and shipping concerns. Additionally, as a consignment shop, Browning notes they have greater price flexibility compared to larger corporations.

"If stuff's been sitting or too pricey, we can kind of react to that. Work with customers, lower the price, put a sale on," Browning said.

TrunkShow, which opened just before the pandemic, further credited its strong social media presence and collaboration with other operators in spreading awareness.

"We do have quarterly block party markets, we do it up top on the parking lot. We have coffee and music and other vendors that we invite to come in and then they help to promote us," Browning said.

Inflation has dropped from a 40-year high in June of 9.1% down to 6.5%, though even the latter figure remains above the Federal Reserve's goal of 2%.

"These higher rates have already had an effect on our labor markets, as we've seen in high-profile layoffs, and in fact we've already seen negative consequences of this on the retail side as those sales continue to fall, along with people's savings," said Goldman.

Now the question remains: will the Federal Reserve issue another interest rate hike, and at what rate?

"They have been having some very aggressive interest rate hikes over 2022, so it is anticipated they will slow down the interest rate hikes over 2023," said York.

"When we see 2.9% GDP, I think that's a good, positive signal that we're starting to weather this storm, we're starting to get towards a new normal in our economy. However, the Federal Reserve is likely going to change their interest rate hikes based on those inflationary numbers," Goldman noted.

High-profile layoffs, largely in the tech sector, have drawn headlines over the past few weeks, though York believes the Triangle is well-positioned to avoid a major impact, noting its workforce diversity.

"We're not reliant on any one single sector and I don't anticipate any national trend if there is a recession being as predominant here," York said.

The Bureau of Labor Statistics reported the national unemployment rate dropped to 3.5% in December.

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