1. ECONOMIC OUTLOOK 2018: “THE COSTS OF GROWTH” Dr. Michael L. Walden

2. HEADLINES
DESPITE SLOW GROWTH, CURRENT EXPANSION WILL BECOME 2ND LONGEST THIS YEAR
GROWTH HAS ACCELERATED
FOCUS HAS TURNED TO THE COSTS OF GROWTH

3. RECENT REAL GDP PATH (ANNUAL % GROWTH RATE)

4. FASTER GROWTH IS BRINGING WORRIES AND REALITIES OF FASTER INFLATION
FROM ANNUAL RATE UNDER 2% IN RECENT YEARS
TO ANNUAL RATE OF 3% TODAY
WORRIES OF IMPACTS ON COSTS OF INPUTS

5. FED TO CONTINUE INCREASING SHORT TERM RATES (%)
UNDER NEW CHAIR POWELL
FOUR OTHER FED BOARD VACANCIES
ALSO REDUCING ITS PORTFOLIO
ULTIMATE BATTLE WITH TRUMP ADMINISTRATION?

6. LONG TERM RATES ARE ALSO RISING (%)
HIGHER RATES INCREASE BORROWING COSTS FOR BUSINESSES AND BUYERS
BUSINESSES AND INVESTORS WORRY ABOUT ULTIMATELY CAUSING AN ECONOMIC SLOWDOWN

7. INCREASES IN INFLATION AND INTEREST RATES HAVE LED TO STOCK MARKET VOLATILITY
MARKET IS ADJUSTING
TO THE COSTS OF
GROWTH

8. PRODUCTIVITY AND LABOR FORCE TO THE RESCUE?
GAINS CAN MUTE IMPACTS OF HIGHER INFLATION AND INTEREST RATES

9. OTHER NATIONAL NEWS WHO WILL GAIN FROM TAX CUTS?
RISING INTEREST COSTS ON A RISING NATIONAL DEBT WILL CROWD-OUT OTHER SPENDING
A “GO” ON INFRASTRUCTURE?
POSSIBILITIES OF A TRADE WAR?

10. NATIONAL FORECASTS FOR 2018
GDP % %
JOBS % %
WAGES % %
INFLATION 1.7% %
GDP and wages are after-inflation; jobs are changes in payroll job numbers

11. NORTH CAROLINA

12. NC AND US JOB GROWTH RATES
2012 EXPLANATION – BIG DROP IN PHARM PRODUCTION IN NC

13. NC SECTOR GROWTH RATES, 2009-2017 (% change in real GDP)

14. JOB GROWTH IN NORTH CAROLINA CONTINUES TO BE IN HIGH WAGE AND LOW WAGE INDUSTRIES

15. GROWTH ALSO CONTINUES TO BE CONCENTRATED IN LARGE AND MEDIUM SIZED METROS

16. REGIONAL GROWTH HAS NOT BEEN EVEN (% CHANGE IN PAYROLLS, 2010 - 2017)

17. THE NCSU LEADING INDICATOR INDEX SUGGESTS CONTINUED STATE GROWTH

18. NORTH CAROLINA ISSUES FOR THE FUTURE
1. TECHNOLOGICAL UNEMPLOYMENT 2. URBANIZATION OF THE STATE 3. SUPPORT IN DEPOPULATING COUNTIES 4. ACCOMMODATING 3 MILLION MORE RESIDENTS BY POWERING OUR FUTURE 6. IMPROVING EDUCATION & RE-SKILLING

19. ORANGE COUNTY

20. ORANGE COUNTY EMPLOYMENT TRENDS

21. ORANGE COUNTY UNEMPLOYMENT RATE TRENDS (%)

22. KEY TAKE-AWAYS NATIONAL – CONTINUED GROWTH, BUT WITH COSTS
STATE – FASTER GROWTH THAN NATION FUELED BY IN-MIGRATION
ORANGE CO. – CONTINUED STRONG GROWTH; PRESSURE ON HOUSING SUPPLY AND PRICES & TRAFFIC

23. QUESTIONS