Better, but not good, is the economic forecast

This morning at the Hilton Wilmington Riverside, experts predicted economic improvement in 2011. The experts then went to lengths to clarify that improvement did not necessarily mean a full economic rebound from the depths of the 2008 recession.

“We really were very hard hit in this recession,” said Woody Hall, senior economist at the University North Carolina Wilmington. “The operative word for now is better. That is not the same as good.”

Hall presented after Richard Kaglic, an economist for The Federal Reserve Bank of Richmond office in Charlotte, at the 19th Annual Economic Forecast presented by McGladrey, the Greater Wilmington Chamber of Commerce and Wilmington Industrial Development. Both economists pointed to a slew of economic indices that show slight improvement from previous depths of 2008 and 2009, though hardly could foresee significant economic growth.

“We knew 2010 was going to be a roller coaster,” Kaglic said. “Typically coming out of a recession, consumer spending increases robustly. That didn’t happen this time.”

Kaglic pointed to unemployment and underemployment as major lags on the national and state economy. Even as the strain of unemployment causes social strife, qualified workers obtaining only part-time work is an underreported problem for the economy.

Additionally, signals in the residential and commercial real estate market do not bode well for recovery. Though new housing inventories are at the lowest point in years, Kaglic could still not see a rebound in new housing construction.

“We’ve never really experienced an economic recovery without a significant contribution from the housing market. The residential real estate market is still troubled. What we’ll see in 2011 will be a little better than 2010. It’s a long climb out,” Kaglic said.

One positive sign for North Carolina was an increase in manufacturing. In both October and November manufacturing output increased across a fairly broad spectrum of industries.

With consumer spending accounting for roughly two thirds of economic activity, Hall and Kaglic point to job creation and job growth as the keys to bolster the real estate markets and the economy as a whole.

“The good news is, it can’t get much worse,” Kaglic said.