Economist: State may avoid national recession
By Jason Reagan
reagan@wataugademocrat.com

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While the U.S. has been firmly in grasp of a recession since January, North Carolina may be one state that weathers the storm, according to a local economist.

In a “Business Barometer” report for the N.C. Bankers Association, Appalachian State banking professor Harry Davis and association economist said the economic slowdown started at the beginning of the year but should be short.

“To this point in time, the most important indicator that we are in a recession is data from the employment front,” Davis wrote, adding the economy lost 22,000 and 63,000 jobs in January and February.
“We can expect larger losses for the next several months.”

Despite the bad news nationally, Davis is bullish on the state economy.

“While Florida, California, Ohio, Arizona, Nevada, Michigan are already in a recession, North Carolina is not,” he said.

"Our state will not experience a decrease in Gross State Product in this recession.”

He said housing has not slumped in the state as it has in other parts of the U.S.

“North Carolina will slow but not experience the downturn facing several other states.”

Davis compared the current recession to the “short and shallow” ones in 1991 and 2001. Each lasted about eight months and the Gross Domestic Product declined 1.3 and 1.4 percent.

While the recession may be short, Davis said the recovery my be tougher, adding person-debt levels will be higher coming out of the current recession and household wealth will have taken harder hits.

“The result will be a slower rate of growth in the recovery that begins later this year or in early 2009,” he said.