FULL STEAM AHEAD.

In early January, Business North Carolina publisher Ben Kinney invited six business, academic and political leaders to Campbell University's downtown Raleigh campus to discuss their outlooks for 2023. While a recession is looming, North Carolina is better positioned than most states to weather a downturn, panelists agreed.

PANELIST

Anthony Copeland senior economic development & corporate strategist, Brooks Pierce

Adam Currie chief banking officer, First Bank

Chuck Mattina senior vice president insights and analytics, Sales Factory

Jason Saine State representative, North Carolina General Assembly

Dr. Mark Steckbeck associate professor of economics. Lundy-Fetterman School of Business, Campbell University

Patrick Woodie president and CEO, NC Rural Center

Lundy-Fetterman School of Business at Campbell University, NC Rural Center, Brooks Pierce, First Bank and PBMares sponsored the discussion. It was moderated by Ben Kinney, publisher of Business North Carolina. It was edited for brevity and clarity.

WHAT IS THE ECONOMY LOOKING LIKE IN 2023? IS THERE A RECESSION AHEAD?

STECKBECK: We're actually looking at much better prospects (since late 2022) although I still think pretty certainly we'll be in a recession sometime this year. In November, inflation was hitting over 9%. The most recent number was 7.1 %. That's a big drop. We are seeing the supply chains coming back to normal with a strong dollar because of the Fed's rate increases have reduced export demand, which is helping to alleviate inflation.

It's a unique time. We're seeing recession indicators, but strong employment numbers. Well, we now have to worry about some geopolitical issues that may instantaneously change things.

The unemployment rate, which was nationally 3.5%, is now 3.7%. It is 3.9% in North Carolina. When the unemployment rate increases by half a percentage point over its average for the year,--which again is about 3.5%--that tends to be an indicator of a recession.

Whenever the Fed has had to reduce inflation by raising interest rates, that has always been followed by a recession, for the past 50 years. And so we really are looking sometime this year, we will be facing a recession. The question is will it be a hard or soft landing? We could look at maybe a 1 % reduction in GDP lasting probably anywhere from three to six months If we have a soft landing. If it's a little harder, we're probably looking at unemployment of 6%, maybe 7%, which would be pretty high. We'd look at a 2% decrease in GDP and something that might last a year or even more. I think the possibility of that happening has lessened. I think we economists are more in line with looking at the softer landing. In North Carolina, we are in a unique situation. We have a lot of growth happening with the ninth-fastest growing population. We were z just nominated No. 1 for economic development in the United States. (There are) 100,000 jobs and $110 billion in business investments happening here. We're seeing tourism picking up. Manufacturing has had a drop, but it's picked up again.

SAINE: We 've got some new faces at the legislative building, where we're just one short of a supermajority in the House of Representatives. We've been close over the last several years, but have worked on bipartisan legislation and bills and budgets over the last years. We've finally found a way to work on budgets with the Cooper administration. We're working with Governor Cooper on his priorities as well.

We've been very wise in how we've invested in our state. When you look at the good news that we have, I do believe (a recession) will probably be much softer and a lot easier for us in our state than what I've seen in other states.

The pandemic showed where our weaknesses were. A lot of our rural communities don't have high speed Internet. But we're getting there and we want to make sure that we stay on track. It's good to see that inflation is coming down because we've got a lot of building that's going on. We've put together a capital expenditure fund...