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18 <br /> NC STATE <br /> starts and a moderation in the rate of housing recession before the end of the decade. While <br /> price increases. The stock market will gain— the next recession will not be as severe as the <br /> but only slightly—and the dollar will continue Great Recession of 2008-2009, it will require <br /> strengthening. The latter will present retrenchment by households and businesses <br /> challenges for the manufacturing sector and for at least half a year. The best guarantee of a <br /> keep the GDP growth rate from being even moderate recession is modest debt loads by <br /> higher than 2.4%. households and businesses going into the <br /> downturn. <br /> With the Fed's interest rate moves, <br /> `Households' will see higher borrowing costs in The North Carolina Economy: Ahead of the <br /> 2016. This will cause the relative size of Pack, But Not Everywhere Nor for Everyone <br /> household debt payments to increase and the Table 2 shows the recent performance of the <br /> savings rate to fall. But more limited household key indicators of the North Carolina economy. <br /> borrowing will mean only a small increase in the Compared to both the longer (1997-2010) <br /> relative size of household debt. An acceleration period and the more recent post-recessionary <br /> in household formation will boost GDP growth. period (2010-2014), North Carolina performed <br /> With regard to `Fiscal Policy', faster economic much better on all measures (1997 is the <br /> beginning year of the longer period due to the <br /> growth will produce larger federal tax revenues, unavailability of state GDP data prior to that <br /> which in turn will keep lids on the relative sizes year). In particular, both real GDP and real <br /> of both the budget deficit and national debt. GDP per capita in North Carolina grew by 50% <br /> However, higher interest rates will mean a rise more than the national average. Labor force <br /> in the relative size of federal interest payments. growth in North Carolina was an astonishing <br /> If the Fed continues raising interest rates five times faster than the national rate, and job <br /> beyond 2016, the impacts on financing the growth from both the household survey and the <br /> national debt will become a prominent issue. payroll survey were stronger than the <br /> The Fed is now on an announced track to be comparable national growth rates. The state's <br /> rapid labor force growth was likely due to in- <br /> less stimulative in its monetary policy. The migration of new households from other states <br /> federal funds rate is forecast to jump to 1.0% by <br /> the end of 2016. Money supply growth will as well as a return of"discouraged workers" <br /> su pp y g (unemployed individuals who had stopped <br /> moderate and excess reserves will slightly looking for work and therefore were not counted <br /> contract. A faster paced economy with higher <br /> interest rates will accelerate money velocity. as officially unemployed) to the active labor <br /> force. The fact that the labor force grew faster <br /> The "R" Word than employment in North Carolina explains the <br /> rise in the state jobless rate during some <br /> The current economic expansion, which began months in 2015. <br /> in mid-2009, is already longer than all but three <br /> of the eleven post-World War II expansions. The state is expected to out-perform the nation <br /> Hence, there is understandable concern about again in 2016. The forecasted 2.1% growth in <br /> the imminent possibility of a new recession. payroll jobs will boost non-farm job numbers by <br /> close to 90,000. The state's "headline" <br /> Although no economic forecast is absolutely unemployment rate will drop to near 5% by <br /> certain, all signs point to no recession in 2016. year's end. Yet job growth will not be evenly <br /> However, historical precedent suggests a likely spread among sectors and salaries. <br /> 4 <br />