As we head further into 2023, what is the state of our local economy? To what extent should we be worried about inflation, unemployment, or the possibility of a recession?
Economic experts say there’s a chance we could see a recession this year – but whatever happens nationally, our local economy appears strong.
“The Chamber has surveyed local businesses every February for the last 15 years…and (this year) we were able to report real optimism,” says Aaron Nelson, the president and CEO of the Chamber for a Greater Chapel Hill-Carrboro. “Fifty-two percent of local businesses say they intend to hire in the next 12 months, forty-five percent say they’re holding steady – and only four percent have plans to lay off.”
That’s no surprise, as businesses have been struggling to fill vacancies since the pandemic hit. But that strong hiring market is especially welcome news this year, because many economists are forecasting a minor recession by the end of 2023.
Recessions usually mean higher unemployment rates – and unemployment is historically low right now, so that wouldn’t be a surprise either. (The national unemployment rate in January was 3.4 percent; the last time it was that low was May of 1969.)
But retired NC State economist Michael Walden says this recession – if it even comes – might be different, because so many positions are currently vacant.
“There’s some economists who argue we could have an officially declared recession without a rise in unemployment,” Walden says, “because businesses (can) reduce their costs by simply taking away all those unfilled positions.”
Listen to Aaron Keck’s conversation with Aaron Nelson and Michael Walden.
In other good news, Walden says the inflation rate is likely to drop throughout 2023 – from its current rate of 6.4 percent down closer to 3-4 percent, then approaching 2 percent (the pre-pandemic level) in 2024.
Read Michael Walden’s presentation to the Chamber from last week.
Back locally, another positive trend that seems likely to continue is a big spike in consumer spending. Retail revenue in Orange County increased substantially during the pandemic and has remained high ever since.
That’s partly because we’re simply doing a lot more of our shopping online. When an Orange County resident buys an item on Amazon instead of Southpoint Mall, that purchase now counts as revenue for Orange County instead of Durham.
But Nelson says there are ways to measure in-person spending as well. And there, too, Orange County’s economy is looking good.
“In Hillsborough, (for instance), they have a one-percent meals tax,” Nelson says, “so when you take a look at whether that’s growing or not, you take Amazon out of the mix. And that has showed strength.”
And Nelson says another key indicator is the number of people walking in downtown Chapel Hill-Carrboro.
“We’re able to track: there’s more people walking downtown in the last 12 months than there (were) pre-pandemic,” he says. “So we’ve rebounded fully – while downtown Raleigh and downtown Durham have not.”
So after all that, what’s the state of the local economy in 2023?
Michael Walden sums it up like this: “I am optimistic,” he says, “but I’m also cautious.”
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