CHARLOTTE- No recession happened in 2022, despite many predictions that the economy would fall into an economic recession – and the same could happen in 2023.
That’s according to an economist at the University of North Carolina at Charlotte who spoke about the economic environment in the United States and North Carolina during the North Carolina Economic Forecast Wednesday afternoon.
“The fact is there was no recession in 2022,” said John Connaughton. “Q1 we slipped a bit, Q2 not as bad, and we expect Q3 and Q4, when all the data is available, to see modest growth over the course of the year. “
Overall, Connaughton said, the economy is expected to have grown about 3.4% this year.
It is even then that certain sectors, those which are affected by the rise in interest rates, have contracted this year.
Still, Connaughton said, it’s been a great year for job growth, especially in North Carolina.
Regardless of whether gross domestic product in the sector was growing, flat or declining, there was job growth in North Carolina’s economy, he pointed out.
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Which means… no recession in 2023?
“We don’t really see that there will be a recession in 2023, given the current information we have,” Connaughton said.
This does not mean that there will not be economic hardship for households or communities. Indeed, while the state’s unemployment rate is currently at 3.8% — up in recent months — job growth is expected to slow and the state’s unemployment rate is expected to rise in 2023, after the first of the year, Connaughton said.
The economy can expect to see a continued decline in employment in 2023, with probably around “less than half the jobs will be created”, according to Connaughton.
“We expect job growth to be somewhat more modest in 2023,” he noted. “We expect all sectors to still try to fill vacancies in the future regarding the unemployment rate.”
The latest jobs report from WRAL TechWire shows that in the Triangle, job postings have slowed in recent months. And a recent CompTIA report shows that tech job openings have fallen in North Carolina even as tech employment has increased.
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There are still major challenges ahead
The U.S. economy is very different from what it was in the 1980s, 1990s and early 2000s, Connaughton noted, largely due to the country’s demographics, which impact the job market. .
Over the next half-decade, Connaughton said, we will experience “the peak of baby boomers.”
But these people – 21.6 million of them – are already beginning to retire, and more retirements will follow.
Here’s the math, Connaughton explained: Baby boomers number 21.6 million, but the next generation of workers only totals 20.75 million “who will be old enough to replace them.”
The activity rate indicates that some people have already left the labor market and may not be planning to return. This has resulted in continued pressures in the labor market, especially for employers who are always looking to hire talented workers.
“You can start to see that labor force participation rates are going to keep going down,” Connaughton said. “We really have some labor issues that we really should start solving.”
Will the 4.4 million “missing” workers return to the labor market? It’s a big maybe
But a coming recession is still possible
Still, Connaughton noted, answering questions during a virtual Q&A on Wednesday, it’s conceivable that the U.S. economy could enter a period of recession.
“I can conceive of that, but it’s going to take the Fed in my estimation,” Connaughton noted. “I think there are two things that would have to happen for that to happen.”
First, the Federal Reserve would raise the federal funds rate above 6%, and second, unemployment would rise and remain persistent in the economy.
In summary, Connaughton noted, we may know more after next week’s meeting of the Federal Reserve’s Open Market Committee and any public statements made by Jerome Powell, the Federal Reserve’s chairman.
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