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Growth not likely to reduce unemployment; residential real estate stabilizes

Woody Hall speaks during the 2011 Economic Outlook Conference at UNCW on Tuesday, Oct. 11, 2011.

Buy Photo Photo by Paul Stephen
Published: Tuesday, October 11, 2011 at 12:46 p.m.
Last Modified: Tuesday, October 11, 2011 at 4:10 p.m.

Waiting for a strongly improving economy? You'll need patience, two UNCW experts told an audience at the eighth annual Economic Outlook Conference Tuesday.

Their predictions, if not somber, certainly were sobering to the audience gathered at the University of North Carolina Wilmington's Burney Center.

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.