Economist: Regional Boom Will Continue in 2007
Posted January 3, 2007
The region is not going to stop growing.
“If you don’t like the traffic now, it’s only going to get worse, so have a good time,” John Silvia, chief economist at Wachovia Corp., told several hundred business executives Wednesday morning at the annual 2007 Economic Forecast put on by the Greater Raleigh Chamber of Commerce.
Many in the crowd laughed – some perhaps a bit nervously because they know the region’s continued growth is putting more pressure on infrastructure from roads to schools, water supply to sewer, electricity to natural gas.
A report issued simultaneously with the forum by the Chamber supported Silvia’s bullish outlook.
“While 2007’s growth might not match the expansion in 2006, 2007 should still be a very good year,” wrote NCSU economist Mike Walden. “All major measures of the local economy – jobs, retail sales, income and construction – should be in the ‘plus’ column and keep the Triangle as one of the nation’s premier growth regions. Education, research, health care and medicine, and technology remain the region’s driving forces and make it truly a 21st-century economy.”
Unemployment across the Triangle is under 4 percent, and housing prices have not suffered as they have in many other parts of the country. Even as Silvia spoke, cranes moved heavy equipment and parts for the new convention center being built a block away. A $2 billion boom in building across Raleigh’s downtown – hotel, new bank headquarters, condominiums, parking decks and more – is just the most visible evidence of the economic good times that led a majority of those voting in the Wake County bond referendum chose to approve nearly $1 billion for school construction and repairs to handle a swelling student population.
“People are not moving to North Carolina,” Silvia said. “They are moving to Raleigh, to Charlotte, to Asheville and to Wilmington.
“Professional workers are not moving to Fayetteville. I’m sorry. They are moving to where the job opportunities are, such as in Raleigh and Charlotte.”
Silvia noted figures showing Raleigh with a net migration of 25,586 people in 2005 following a jump of 18,492 in 2004. Charlotte added 34,084, Wilmington 11,152 and Asheville 5,030 in 2005. (The U.S. Census reported in June that Raleigh was the 13th-fastest-growing metropolitan area in the country.)
And he stressed that four “regional factors” – labor, capital, entrepreneurship, technology – are why the Triangle region “does well.”
In four sectors of employment by percentage, the city of Raleigh exceeds North Carolina and national averages. “You are over-weighted in the sectors that are growing, and that’s where you want to be.” In a fifth – manufacturing, a sector that continues to shed jobs – Raleigh ranks lower than the state and national average.
The five categories and work force percentage are:
Construction, 7.1 percent (N.C. 5.9 percent; U.S. 5.5 percent)
Manufacturing, 6.7 percent (N.C. 14.5 percent; U.S. 10.7 percent)
Information, 3.7 percent (N.C., 2 percent; U.S. 2.3 percent)
Professional, business services, 16.5 percent (N.C. 11.3 percent; U.S. 12.6 percent)
Government, 18.8 percent (N.C., 17 percent; U.S. 16.3 percent)
Raleigh and the region also benefit from factors beyond being the state capital, Silvia added. “Technology, health services and the universities really distinguish Raleigh,” he said. “It’s not just the state capital. It has a huge advantage because it is more diversified.”
He cited statistics comparing Raleigh with Columbia, S.C., Richmond, Va., Harrisburg, Pa., and Columbus, Ohio, in which Raleigh led in building permits and net migration of population. But a third statistic pointed to a problem Raleigh is facing – home prices. Existing home prices in Raleigh were second only to Richmond.
“Raleigh is not an inexpensive place to live,” he said.
Another trouble spot is education, he added. North Carolina and the United States are not graduating enough people to fill jobs in growing sectors such as engineering and financial services.
Silvia also complained that state government spends “too much money” and that North Carolina ranks only 37th in the State Business Tax Climate Index as compiled by the Tax Foundation.
“We are not very competitive,” Silvia said. “The best economic development tool South Carolina has is North Carolina taxes.”