Wednesday, March 16, 2011

Total personal income in the Wilmington Metropolitan Statistical Area (MSA) is forecast to grow 3.3 percent during 2011, with the growth rate slowing to around 3 percent in both 2012 and 2013. Personal income is the total income earned by individuals from all sources. The three counties of Brunswick, New Hanover and Pender comprise the MSA.

William W. (Woody) Hall Jr., professor of economics and senior economist with the Swain Center for Business and Economic Services at the University of North Carolina Wilmington Cameron School of Business, announced the predictions during the Joint Economic Growth Summit at UNCW today, in collaboration with Ravija Badarinathi, professor of statistics in the UNCW Department of Information Systems and Operations Management. The summit is an annual event jointly sponsored with Coastal Carolina University.

Hall noted that growth in personal income in the three-county region began to slow in 2007. Income rose 3 percent in 2008 only to fall 0.5 percent in 2009, the first full year of the most recent national recession. There was virtually no growth over 2010.

Unlike previous recent recoveries, area employment has been slow to recover during the current expansion, which officially dates from the middle of 2009. Hall noted that the MSA added an average of 400 jobs per month over the period 2002-2007 leading up to the recession. Were employment to resume that growth now and continue into the indefinite future, it could take up to three years before area employment returns to its pre-recession (2007) level of 167,500.

After peaking at almost 11 percent during the third quarter of 2009, the MSA unemployment rate has declined slowly. The average monthly rate over 2010 was 10 percent, the same as the 2009 rate and more than twice that of the 2007 rate of 4 percent. Hall noted that the unemployment rate is a lagging indicator and will likely remain high by historical standards over the near future.

The local residential real estate sector was especially hard hit during the last recession. Construction employment fell 7.8 percent between 2008 and 2009. A comparison of third quarter 2009 and 2010 data shows an increase of 2 percent in construction employment. Employment in real estate and rental and leasing fell 7.4 percent between 2008 and 2009. Employment in this sector has yet to show growth as third quarter 2010 employment was 1.8 percent below third quarter 2009 employment.

The business school professors point to several signs that local economic activity is stabilizing.

After falling 5.4 percent over 2008 and 8.1 percent over 2009, MSA retail sales resumed growth during mid-2010. Sales rose an estimated 6.5 percent between 2009 and 2010. Even with this recent growth, MSA sales are still 25 percent below their 2007 peak of almost $11 billion. Retail trade accounts for 17 percent of total employment in the three-county area, second only to health care and social assistance.

The area residential real estate market may have stabilized. After reaching a low point during the first quarter of 2009, sales of existing single-family homes in the three-county area have been relatively stable. At their low point, sales were down more than 70 percent from their peak in the mid-2005.

After falling over most of 2009 and into the first quarter of 2010, passenger traffic at the Wilmington International Airport has rebounded. Traffic rose almost 2 percent over 2010, and the 2010 traffic counts are only 2 percent below their 2008 peak of 840,000.

After falling over the period late 2008 and into the middle of 2010, room occupancy tax collections in New Hanover County have resumed growing. Collections rose 5 percent over 2010. Even with this growth, 2010 collections remain 8 percent below their 2008 peak of $8.1 million.

Badarinathi and Hall caution that this forecasted growth assumes no major tropical event or terrorism act for the forecast period. Such unpredictable events could have a significant negative impact on the regional economy.

For additional comment:
Hall at 910.962.3419 or hall@uncw.edu
Badarinathi at 910.962.3518 or ravij@uncw.edu

Media contact:
Dana Fischetti, media relations manager, 910.508.3127 or fischettid@uncw.edu