UNCW Outlook Conference: Local Economy Will Grow Over the Next Year

Tuesday, October 13, 2015

The Wilmington Metropolitan Area will see economic growth over the next year that will keep pace with the state, according to UNCW regional economist Adam Jones.

Jones, assistant professor of economics and regional economist with the H. David and Diane Swain Center for Business and Economic Services at the UNCW Cameron School of Business, announced the local economic forecast during “OUTLOOK: New Faces, New Forecasts.” The event was held Oct. 13 at UNCW and was sponsored by the Swain Center. Thomas D. Simpson, the executive in residence at the Cameron School of Business, presented the national economic outlook.

The Wilmington Metropolitan Statistical Area (MSA), which includes New Hanover and Pender counties, is expected to grow 3 percent during 2015, the same as the state. The national projected growth is 2.2 percent. This MSA economy is expected to grow 2.5 percent in 2016.

Jones described the local economy as a car being driven with both feet.

“There are reasons for optimism as well as areas for concerns,” he said. “The economy has been improving, even if slower than what we may wish at times. While increased employment, better retail sales numbers and an improved housing sector are fuel to the economic engine, we continue to have one foot on the brake.”

Jones noted that output growth should be strong enough to cause a continued reduction in the area unemployment rate. The area’s unemployment rate for August 2015 was 5.7 percent and 5.1 percent for the nation in that same time period.

Following a substantial decline during 2005-2009, the residential real estate sector has stabilized and is showing signs of a sustained rebound, with both prices and sales volume increasing, Jones said. Since the low reached in late 2009, sales of existing single-family homes have doubled as of the second quarter of 2015. Housing affordability has stabilized as the ratio of home prices-to-income has leveled off, slightly above pre-2000 averages.

Retail sales have also increased. Adjusting for seasonal patterns, taxable retail sales increased nearly 30 percent over the 18 months ending June 2015, compared to a 7 percent increase in the prior 18 months. On an annual basis, sales have more than recovered from their recession losses. The same is true for the travel industry in the area, he said.

Employment growth during the current recovery remains very weak, Jones noted. Coupled with an expanding labor force, weak job growth suggests there is room for improvement in the regional labor market.

David Simmons, Chairman and CEO of PPD, and Jay Wileman, current Senior Vice President and COO (and incoming CEO) of GE Hitachi Nuclear Energy, joined Chancellor Jose V. Sartarelli for a panel discussion following the economic forecasts. The leaders spoke about their organizations’ contributions to southeastern North Carolina.  

The challenges that PPD faces include the labor market and compensation inflation in the labor market in key roles, said Simmons.

“It’s quite interesting to see underemployment overall in the U.S. economy, but when you get to very highly educated workers – Ph.D.-level biostatisticians, for example – our ability to have a strong, high supply of these folks is limited,” he said. “And, frankly, we have to go outside of the U.S. to fill a lot of these needs.”

If there is an increase in the number of individuals trained in the quantitative and scientific fields, it would take some of the pressure off the company’s labor markets, putting PPD in a stronger position, he added.

Sartarelli highlighted three key factors that will drive UNCW’s future growth: the number of high school graduates, the number of international students and increasing online education. North Carolina produces 94,000 high school graduates per year, a number that has been flat for a number of years. A period of growth is expected in the next two to three years.

“Every university, public and private, is going after the same market,” he said.

International students are one source of potential growth, with 890,000 international students in the U.S. Currently, UNCW has 350 international students. Online education is exploding as well, Sartarelli added. The university currently has 1,500 students online.

“I think the prospect for the future is very positive,” he said.

-- Venita Jenkins