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Labor market conditions update expected Tuesday

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(The Center Square) – The North Carolina Department of Commerce on Tuesday will host economists to discuss the state’s latest labor market conditions and the possibility of a hard crash or soft landing.

The department’s Labor and Economic Analysis Division will host the twice monthly 30-minute discussion through a Microsoft Teams link posted to the “LEAD, NC Dept of Commerce” Twitter page.

“Each session is led by analysts from NC Commerce’s Labor and Economic Analysis Division and offers insight and analysis for data driven topics,” according to a notice.

The department’s NC Economy Watch report for July notes that “the economic slowdown over the past year has been ‘soft’; although our economy is slowing, it’s still growing and showing no signs of a recession.”

The report comes a week after left-leaning CNBC ranked North Carolina as the top state for business for the second year in a row. The analysis, which measured 50 states across 86 metrics in 10 categories, also ranked the Old North State first in workforce, third in economy, seventh in education and 10th in business friendliness.

The Department of Commerce contends that while inflation at decades-high levels is “straining household finances and casting an ominous pall over our economic outlook,” the state’s economy is continuing to grow.

“For example, the total number of nonfarm jobs in North Carolina increased 2.4% over the year in May 2023. This is a steep decline from the pace we saw in the aftermath of the COVID-19 recession, when job growth rates topped 12%, and a marked slowdown from the growth rate seen at this time last year (4.6%),” according to the Economy Watch report.

“Nonetheless, slower growth is better than no growth at all; at 2.4%, job gains remain well above the prepandemic average of 1.9%, demonstrating the continued resilience of our economy in the face of higher prices and rising interest rates.”

The report also points to price growth in the consumer price index that has declined over the last year to 3.1% in June, a significant drop from the 8.9% rate the year prior. Inching closer to the Federal Reserve’s 2% target “might appear to be encouraging news at first glance,” but “there are also troubling signs of persistence in the consumer price data when we exclude volatile items like gasoline to get at the underlying dynamics of inflation,” the department reports.

“One closely followed measure of underlying inflation, the Cleveland Fed’s median CPI, has declined slightly from its 2023 highpoint but remains elevated at 6.2%,” according to the report, referring to the Federal Reserve Bank of Cleveland and the consumer price index.

Other unresolved factors include strong consumer spending and a tight labor market, which are contributing to an imbalance in supply and demand.

“While our experience from the early 1980s suggests it could take a recession to get inflation under control, the resilience of our economy over the past year offers hope we might be able to pull off a soft landing this time around,” the report read.

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