Job growth forecast as jobless rate rises
7,500 Net job gain predicted in Charlotte area for '01
"Republished with permission from The Charlotte Observer.  
Copyright owned by The Charlotte Observer. 

By STELLA M. HOPKINS

With the nation headed for - or already in - recession, job growth forecasts and new job announcements for Charlotte and the Carolinas reflect a sharply slowing but still growing economy.

Wachovia economist Mark Vitner estimates the seven-county Charlotte area will add 8,500 jobs this year - 75 percent fewer than last year. That's even more dismal than his forecast prior to the Sept. 11 terrorist attacks that further hurt a weak economy.

The N.C. forecast calls for 35,500 net new jobs, less than half last year's number. In South Carolina, Vitner expects 13,200 jobs, down 70 percent from last year.

For a region spoiled by rapid growth, the declines are painful. But compared with the early 1990s - the country's last severe economic downturn - job growth appears to have a stronger foothold this time. In 1991, the Carolinas lost 77,200 jobs, almost 13,000 just in the Charlotte area.

"I think folks will be surprised," Vitner said. "Most people think we won't add jobs this year."

For the Carolinas, slow but continued job growth could be the biggest difference between this downturn and the recession that began in July 1990 and continued in 1991. That's important because jobs have a huge impact on consumer confidence, and skittish consumers don't spend. Consumer spending accounts for two-thirds of the economy, and many economists and businesses are depending on consumers to reverse the downturn.

No question, the Carolinas job picture isn't pretty. Some counties have double-digit unemployment rates. Manufacturing, a dominant employer, has been the hardest hit, steadily shedding workers. Some of the biggest employers, including US Airways Group Inc., Freightliner LLC and Corning Inc., have slashed jobs.

Both Carolinas have had a month or more in which fewer people were working than a year earlier, according to the Bureau of Labor Statistics. That hasn't happened since the last recession.

In June, for example, North Carolina had 3,975,000 workers, down 4,400 from June 2000. In August, South Carolina had 1,877,100 workers, 2,800 fewer than a year earlier.

But even with declines, employment in both states remains above average employment for all of 2000. Gains in construction, finance and service industries are outpacing losses.

On a more local level, the Charlotte Chamber's tally of job announcements through Sept. 30, for Mecklenburg County, showed 6,300 fewer than last year, said Tony Crumbley, the Chamber's vice president of research.

But companies still say they're hiring. Cigna HealthCare, for example, said it will add 400 jobs. Crumbley expects companies will announce 10,000 jobs this year in the county - down from more than 17,000 jobs last year.

"That's no shock," Crumbley said. "They've been down all year, but that's still 10,000 new jobs."

The thing is, while the area will likely emerge with a small net increase in jobs, Charlotte is hooked on big growth.

The lure of the Sunbelt and rebuilding after Hurricane Hugo helped soften the blow of the last recession, and the region escaped largely unscathed from the Asian currency crisis in 1998.

"We start to expect an economy that just grows indefinitely since it had done it for 10 years," said Bob Burns, regional labor market analyst at the Charlotte Employment Security Commission office. "We forget that historically, the economy is cyclical."

Layoff reports and rising unemployment rates have certainly been factors in declining consumer confidence rates, here and nationwide. Last month, consumer confidence dropped to its lowest level since the last recession, according to the widely respected Conference Board.

But the Southeast region was more optimistic than the nation and ranked near the top for the report's nine regions. Southeast expectations for the next six months were the nation's second highest, behind New England.

"So much of what goes into consumer confidence boils down to unemployment," said University of South Carolina economist Donald Schunk. "During that economic boom, when the Southeast was growing so quickly, unemployment rates dropped so low that, generally, we still have a lot of people working.

"That gives people the feeling that because we have been so strong that maybe we are more insulated."

The numbers say we're not. The September N.C. unemployment rate, released Friday, rose to 5.2 percent. That's the eighth consecutive month the state has been above the national rate.

South Carolina will release its unemployment rate next week. For August, the state's rate was 5.1 percent.

"When manufacturing continues to see layoffs and business inventories continue to sag, and the only thing propping up the economy is sort of shaky consumer spending, I think it's very likely we're in a recession," said Schunk, who doesn't expect an upturn before spring.

"We're no longer in this never-never land where things can't go wrong on us," said veteran Charlotte developer Johnny Harris.

However, Harris sees the strength of the city's financial giants, a diverse employment base and the airport's strategic location as cushions to economic hard times. He also sees the region remaining attractive to new investment.

Through Sept. 30, companies have said they'll invest $1.1 billion in Mecklenburg County, according to the Charlotte Chamber. That's more announced new investment than in every full year prior to 1998.

"The population flow into the region pretty much ensures there will be some degree of housing construction, even in a recession," Vitner said. "With new people coming in, you have to open stores and restaurants, add teachers and firemen.

"That gives us a degree of momentum that carries over even into a recession, and when you see all these new things opening up, it gives you a better impression of the economy overall."