NEWSMAKERS BREAKFAST
Feb. 18. With North Carolina’s fourth consecutive year of economic growth in the rear-view mirror, a leading economist says the Charlotte region is well-positioned for another good year. Factors like moderate weather, good quality higher education and dependable job growth mean in-migration will continue for the foreseeable future, according to Jackie Benson, economist at Wells Fargo in Charlotte.
At the Cornelius Today Newsmakers Breakfast last month she forecast two interest rate cuts by the Federal Reserve later this year, as well as modest growth in the Gross Domestic Product of around 2 percent. She doesn’t expect prices to fall, just the rater of inflation softening. She fielded a wide variety of questions from the audience:
A robust labor supply is good for the regional economy. Do immigration crack-downs impact the labor supply in North Carolina?
Benson: Foreign-born workers are responsible for a large portion of the country’s labor force gains over the past few years. A slower pace of immigration would likely subdue labor force growth, which has already decelerated markedly. Labor force growth in North Carolina slipped to just 0.3 percent annually as of November 2024.
Will the US ever become like Japan and not produce enough workers to power business expansion?
Benson: Like many developed economies, the United States faces a demographics challenge. Slowing birth rates are a headwind to economic growth and may eventually give way to a declining labor force. The Congressional Budget Office projects that, absent immigration, the U.S. population will begin to shrink in 2033.
For young graduates seeking jobs, what are the best growth industries in and around Charlotte?
Benson: Finance, technology and life sciences are key industries propelling job growth in the Charlotte metro. Although a relatively small portion of the overall labor market, employees on finance and insurance payrolls have increased from 8 percent of Charlotte’s workforce in 2019 to 9 percent today. Similarly, workers in the professional, scientific and technical services industry comprise a 7 percent share of total payrolls, up from 6 percent in 2019.
If more affordable homes are a key driver of growth in the Carolinas, and more people are moving here every day, when will pricing here no longer be advantageous?
Benson: Although North Carolina has experienced rapid home price appreciation in recent years, its relatively more affordable real estate should continue to draw new residents from out of state. According to Redfin, the median sales price in North Carolina is $376,000, below the U.S. average of $427,000. People searching Redfin for homes in Charlotte are most likely to relocate from New York City and DC, where the average home price is $830,000 and $630,000, respectively.
What’s the rate of home price appreciation in NC vs. the nation as a whole?
Benson: According to CoreLogic, home prices are growing 3.6 percent year-over-year in North Carolina as of November 2024, slightly above the U.S. average rate of 3.4 percent. Price appreciation is firmer in the Charlotte area, where home prices are up 4.0 percent.
What is your forecast for mortgage rates?
Benson: We expect mortgage rates to dip slightly alongside additional Federal Reserve rate cuts this year, but do not anticipate a return to the pre-pandemic normal of 3.0 percent. We forecast that the average 30-year fixed mortgage rate will remain comfortably above 6.0 percent through year-end 2026.
Is inflation finally under control? What is your forecast?
Benson: Inflation has made meaningful progress subsiding from its post-pandemic highs. The core Personal Consumption Expenditures deflator, which is the Fed’s preferred measure, has retreated from 5.6 percent in February 2022 to 2.8 percent in November 2024. That said, inflation progress appears to be stalling amid firm price pressures in the services sector. We do not anticipate core inflation will reach the Federal Reserve’s 2.0 percent target over the next few years, expecting the annual rate to remain stuck around 2.5 percent in 2025 and 2026.
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