The Henderson County Chamber of Commerce and Prescott Auto Group hosted the annual Economic Outlook Breakfast featuring speaker Harry David, PhD.

Chamber member Randy Hunter welcomed the crowd, and mentioned the importance of the manufacturing, retirement, agriculture, and tourism industries to the economy of Henderson County.

Rusty Edwards, Regional Executive at First Bank, said that First Bank is happy to help sponsor this year’s Economic Outlook Breakfast and introduced the speaker.

Dr. Harry Davis is the Professor of Banking at Appalachian State University and Economist for the North Carolina Bankers Association.

Davis began his speech my saying that the country is technically not in a recession, mentioning the 2% GDP growth over the last year. He said that consumer confidence is high, and that two sectors — housing and manufacturing — are slowing while the service sector is expanding, which is keeping the country out of a recession.

Hourly earnings growth rates have decreased from 7% to 4%, and Davis said that the “people at the bottom saw the largest chunk of these increases.” He also said that the federal government is no longer in charge of setting minimum wage requirements; the big box chain stores are doing that anyway.

With the unemployment rate in the country at 3.4%, Davis said “we can’t be in a recession.” He said that the unemployment rate is the lowest in 53 years. For Henderson County specifically, the unemployment rate is 2.6%, the 95th best out of 100 NC counties. “The county has a low distress index named by the NC Department of Commerce,” he said. “Henderson County is doing extremely well.”

There are approximately 11 million unfilled jobs in the U.S., and Davis said that there are several reasons for this including rising costs for childcare and elder care as well as an inflation rate of about 6%, though that number is slightly down from a recent 9% inflation rate.

A graphic showed the ISM Report on business’s Manufacturing Purchasing Manager’s Index ranking under 50 for the last three months, a significant slowdown from the previous year. Davis said that the industry hopes to reshore 350,000 workers this year, reducing our dependence on China.

The retail industry bounced back in January after low-producing months in November and December, perhaps spurring the biggest January in history for stock market repurchases, according to Davis.

While the real estate inventory is increasing slightly across the U.S., the market is still five million units short, according to Davis. He said that for the first time since 2009, housing starts are down, and down by 25%. He also said that home sales are down by about 35% with the interest rate currently at 6.75%.

The population growth for NC was up by 9.5% between 2010 and 2020, but according to Davis, this is not because of more babies, it is because so many people are moving to the state. He said that rural areas are shrinking while urban areas are growing, and that NC is was ranked number one in the country for a good place to do business. 

“With great pension funds, a rainy day fun, and several mega business deals with possible investments of $1 billion to the state on the table, the problem is the workforce,” he said. “We just need our education system to support that.”

Davis made some predictions for 2023’s economy, including that the GDP frowth this year should be 1%, and that the rate of inflation should drop to 4% by the end of the year. He said that “the Feds” will continue to raise rates starting by 25 basis points then up to 50 then 75 basis points because they think the economy is strong.

Davis also said that home sales will “be flat” this year, meaning no significant growth or decline. He also said that there is a mild recession predicted toward the end of the year and beginning of 2024, though it should be shallow and short-lived, and NC and Henderson County should fare fairly well.

Supply chain problems should be lessening slightly, though there is a huge trade deficit that increases every month simply because “the U.S. is buying so much stuff,” according to Davis. He also mentioned that there will be infrastructure spending happening this year and into the next couple of years, corporate profits are slowing but still strong, and that stocks and 401Ks will rise again in the next two to three years.

The Economic Outlook Breakfast concluded with a Q&A session with the audience, and a thank you by sponsor WNC Business’s publisher Brett Hulsey.