Science in the Triangle

John Silvia

Last year’s gloom was waning and the dark-suited crowd that filled the Fletcher Opera Theater Tuesday dared to laugh again, but John Silvia and Matthew Martin wove a few zingers into their cautiously optimistic predictions at the Greater Raleigh Chamber of Commerce’s 2011 economic forecast. (Read about last year’s economic forecast here.)

“Yes, you have a consumer rebound. Yes, there are a lot of people at the mall, but they’re buying a lot of discount products,” said Silvia, Wells Fargo’s outspoken economist.

“We’ve survived the crash,” he said. “But now we’re on a very different island than we were.”

Martin, the Charlotte regional executive of the Federal Reserve Bank of Richmond, expected more private job creation and an increase in consumer spending particularly in the Research Triangle and the Charlotte areas.

“It’s finally going to feel like there’s a recovery under way,” Martin said. But no need to get euphoric, he added.

Nationwide, consumers increased their spending in August, September and October, numbers of the Bureau of Economic Analysis show. BEA data also show the increase in gross domestic product, the U.S. output of goods and services, accelerated in the third quarter. And manufacturers reported a rising number of orders in December, according to the latest Institute for Supply Management report.

The mood among local business owners is also brightening, said Gary Joyner, chairman of the Greater Raleigh Chamber of Commerce Board of Directors. In a survey, more than half of participating chamber members said they expected moderate sales and hiring increases in 2011.

But the weak housing market and the stubbornly high unemployment rate remain concerns, Martin and Silvia said. In North Carolina, home foreclosures continued to pick up in the fourth quarter and construction workers were still losing their jobs as of November.

Some of these lost jobs may be gone forever, Silvia said. Particularly if they were low- or semi-skilled jobs in rural areas.

The four counties with unemployment rates above 13 percent - Graham on the border to Tennessee, Rutherford and Scotland on the border to South Carolina and Edgecombe east of Rocky Mount - are all off the beaten path.

“Sometimes I think we should shut those four counties down and make them into state parks,” Silvia said.

The situation is rosier in the Triangle, particularly in Durham and Orange counties. Technology and life science companies are expected to continue hiring, especially young, computer-literate professionals.

Possible cuts in the public sector are a risk for Wake County, where government and university jobs make up 9 percent of the labor market, nearly twice the statewide average. As the state legislature is about to consider how to deal with an estimated $3.8 billion budget deficit, North Carolina’s public sector is expected to have one of its worst years.

Some cuts in North Carolina’s public education system would actually be good, Silvia suggested. The state has too many four-year colleges, he said and suggested to close branches of the University of North Carolina in Pembroke and Elizabeth City. The money would be better used to support community colleges and to strengthen math and science education for girls in junior high school.

Silvia had no illusions about the popularity of his ideas. “I’m not running for public office,” he said. “So, I can say what I damn well please.”