RALEIGH – Whether North Carolina’s economy is in a recession – along with the rest of the United States – remains a matter of debate. But recent statistics show that the no matter how one defines recession the state’s economic engine is slowing down.

So says economist Dr. Mike Walden in his new NCSU Index of North Carolina Leading Economic Indicators.

His compilation of various economic data – from building permits to unemployment – “dropped over 1% in October and added to the decline that began in the Spring,” Walden, William Neal Reynolds Distinguished Professor Emeritus at NCSU, says.

Source: Mike Walden

Unemployment climbs

Adding to the gloom, North Carolina’s unemployment rate has now increased three consecutive months.

Walden sees that statistic as a sign of “distress.”

To date, however, Walden has said that a strong labor market in the U.S. is a key indicator that a recession has not hit.

Yet he also says that further interest rate increases by the Federal Reserve could trigger a recession.

A sign of ‘distress’ for NC economy: unemployment rate up, again

Inside the index

The index is designed to forecast as well where the economy is headed over the next several months. And Walden writes that he sees no reversal of the months-long trend.

“The state economy will continue to slow,” he predicts.  “But how ‘slow’ will ‘slow’ become?   That’s the big question.”

However, there is a positive side to the slowdown.

“But if a slower economy causes price inflation to moderate, will it be worth it?” he asks. “The answer likely depends on how slow the economy becomes.”

Inside the numbers:

  • There were drops in the national index and manufacturing hours
  • A 7% rise in initial unemployment claims
  • Building permits remained the same, but were down by over 15% from a year earlier

One positive sign: “manufacturing earnings were up a modest 0.2%.”

Source: Mike Walden

Explaining the index

The Index is composed of five components: the Economic Cycle Research Institute (ECRI)’s Weekly Leading Index (http://www.businesscycle.com/resources/), North Carolina initial claims for unemployment benefits, North Carolina building permits, average weekly hours of work of all North Carolina employees in manufacturing, and average weekly earnings of all North Carolina employees in manufacturing. All data are seasonally-adjusted and modified for differences in prices levels where appropriate. Data are from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and ECRI, whose permission to use their Weekly Leading Index is greatly appreciated. All calculations are done by Dr. Michael Walden, and comments can be sent to michael_walden@ncsu.edu.