1.
ECONOMIC OUTLOOK 2022:
RECOVERY FROM THE PANDEMIC
AND DEALING WITH NEW CHALLENGES
Dr. Michael L. Walden, Reynolds Distinguished Professor Emeritus
North Carolina State University

2.
THE ”BIG” QUESTIONS FOR 2022
1. WILL THE ECONOMY CONTINUE TO IMPROVE?
2. HOW WILL WE “PAY FOR” FEDERAL SPENDING DURING THE PANDEMIC?
3. HOW WILL THE ECONOMY ADJUST AFTER THE PANDEMIC?

3.
DOWNS AND UPS OF THE US AND NC ECONOMIES
(QUARTERLY GDP AS PERCENT OF 2019 IV GDP)
90
92
94
96
98
100
102
104
106
2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2021 III 2021 IV
US NC

4.
LEADING AND LAGGING SECTORS IN THE NC ECONOMY
(% OF 2019 IV GDP)
Information 119% Construction 100%
Professional Services 114% Government 99%
Administrative Services 114% Agriculture 98%
Finance 109% Retail Trade 98%
Wholesale Trade 105% Education 96%
Manufacturing 104% Transp. & Warehousing 94%
Health Care 102% Personal Services 94%
Restaurants & Hotels 102%

5.
RECOVERY HAS ALSO VARIED WITHIN NORTH CAROLINA
EMPLOYMENT IN DECEMBER 2021 AS % OF EMPLOYMENT IN FEBRURAY 2020
GREENVILLE 102% CHARLOTTE 989%
DURHAM/CH 100% WINSTON-SALEM 98%
HICKORY 101% FAYETTEVILLE 98%
JACKSONVILLE 100% GOLDSBORO 97%
RALEIGH-CARY 100% NEW BERN 98%
WILMINGTON 101% ROCKY MOUNT 97%
BURLINGTON 100% ASHEVILLE 97%
NORTH CAROLINA 99% GREENSBORO/HP 96%

6.
TW0 PICTURES OF THE LABOR MARKET
0
2
4
6
8
10
12
14
16
jan,
2020
feb
mar
apr
may
jun
jul
aug
sept
oct
nov
dec
jan,
2021
feb
mar
apr
may
jun
jul
aug
sept
oct
nov
dec
UNEMPLOYMENT RATE, %
US NC
55
56
57
58
59
60
61
62
63
64
Jan,
2020
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Jan,
2021
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct.
Nov
dec
LABOR FORCE PARTICIPATION RATE
US NC

7.
THE “SURPRISE”SHORTAGE OF LABOR
REASONS WHY FEWER PEOPLE HAVE BEEN LOOKING FOR WORK:
• CONTINUED WORRY OVER COVID
• UNCERTAINTY ABOUT SCHOOL SCHEDULES
• REDUCED AVAILABILITY OF CHILD CARE
• CASH FROM STIMULUS CHECKS, CHILD PAYMENTS, ADDITIONAL
JOBLESS BENEFITS, EXPANDED FOOD STAMPS, EXPANDED
“OBAMACARE”
• MORE RETIREMENTS

8.
ALSO, A RE-ALLOCATION OF WORKERS IS OCCURRING
MANY WORKERS USED THE TIME AND
FINANCIAL SUPPORT DURING THE
PANDEMIC TO IMPROVE THEIR SKILLS

9.
BUSINESS RESPONSES TO LABOR SUPPLY ISSUES
1. ATTRACT LABOR WITH HIGHER PAY AND/OR BENEFITS
2. SUBSTITUTE TECHNOLOGYAND AUTOMATION FOR WORKERS
3. IMPROVE WORKER PRODUCTIVITY

10.
LABOR AVAILABILITY
SHOULD IMPROVE AS MANY FINANCIAL ASSISTANCE PROGRAMS ENDED
RETURN OF SOME RETIREES?
THE UP-SKILLING OF MANY WORKERS WILL PRESENT ON-GOING ISSUES
FOR SOME INDUSTRIES
THERE ARE LONG-RUN SOLUTIONS, BUT TAKES TIME

11.
UNPRECEDENTED FEDERAL ASSISTANCE
$5.5 TRILLION
25% of GDP
$80 BILLION to NC

12.
FEDERAL AID SUPPORTED PERSONAL INCOME
18
18.5
19
19.5
20
20.5
21
21.5
22
22.5
23
2019,
I
2019,
II
2019,
III
2019,
IV
2020,
I
2020,
II
2020,
III
2020,
IV
2021,
I
2021,
II
2021,
III
US Trillions $
490
510
530
550
570
590
610
2019,
I
2019,
II
2019,
III
2019,
IV
2020,
I
2020,
II
2020,
III
2020,
IV
2021,
I
2021,
II
2012,
III
NC Billions $

13.
FIRST PANDEMIC OF THIS SIZE IN A CENTURY – UNKNOWNS, UNCERTAINITIES
ERR ON THE SIZE OF TOO MUCH HELP
FUNDS USED TO MAINTAIN HOUSEHOLDS, BUSINESSES, INSTITUTIONS
WANTED ECONOMY TO SURVIVE
WAS TOO MUCH FINANCIAL AID PROVIDED?

14.
BALANCING THE CURRENT
AGAINST THE FUTURE
OPPORTUNITY COST OF
WHAT ELSE COULD DO
WITH FUTURE FUNDS
LOSSES IF LET ECONOMY
COLLAPSE DURING THE
PANDEMIC

15.
FEDERAL RESERVE ALSO STEPPED UP – FINANCED
GOVERNMENT BORROWING, KEPT INTEREST RATES LOW
0
0.5
1
1.5
2
2.5
3
2019 2021
Federal Funds Rate, %
0
1
2
3
4
5
6
7
8
9
2019 2021
Federal Reserve Holdings, $trillions

16.
THE ”FED” SUPPORTS ITS EFFORTS BY CREATING $
MONEY SUPPLY UP 85% SINCE BEGINNING OF PANDEMIC

17.
ISSUE 1: CAPACITY TO CARRY FEDERAL DEBT
(federal debt interest payments as a percent of GDP)

18.
ISSUE 2: INFLATION (% change)
0
1
2
3
4
5
6
7
8
2014 2015 2016 2017 2018 2019 2020 2021 2022
total

19.
TWO FACTORS BEHIND HIGHER INFLATION
DEMAND PULL: ECONOMY IS FLUSH WITH CASH AND ”PENT-UP” DEMAND
HIGHER INFLATION RATE (4% to 5%) THROUGH 2022.
HIGHER INFLATION IS THE “PRICE” OF THE ENORMOUS FEDERAL HELP.
SUPPLY PUSH: FASTER INFLATION IS RELATED TO DISRUPTIONS IN THE PRODUCTION OF
PRODUCTS AND SERVICES AS THE ECONOMY RECOVERS FROM THE PANDEMIC.
THE DISRUPTONS ARE TEMPORARY.

20.
CHALLENGE FOR THE
FEDERAL RESERVE
REDUCING STIMULUS –
MEANING INCREASDING
INTEREST RATES AND
DECREASING MONEY
GROWTH –WITHOUT
HINDERING ECONOMIC
GROWTH

21.
WE FACED THE SAME SITUATION IN THE LATE 1970s
THE FED UNDER PAUL VOLCKER TOOK HARSH ACTION

22.
FORECASTED PATH OF NORTH CAROLINA’S REAL GDP
(red: without new variants; blue: with new variants; green: recession)
507
512
467
504
509
505
510
515
521
542
556
450
470
490
510
530
550
570
2019, IV 2020, I 2020, II 2020, III 2020, IV 2021, I 2021, II 2021, III 2021, IV 2022 2023

23.
HOW WILL THE ECONOMY ADJUST AFTER THE PANDEMIC?

24.
MORE LABOR
MARKET DISRUPTON
BIGGEST ISSUE OF POST-
PANDEMIC ECONOMY
SHIFT FROM PRODUCTION TO
DELIVERY, SERVICES
MORE JOBS IN TECHNOLOGY
POST-HIGH SCHOOL TRAINING,
APPRENTICESHIPS, ON-THE-JOB
TRAINING, COLLABORATIONS
BE PRO-ACTIVE

25.
BIG IMPLICATIONS
FOR EDUCATION
SOME LEVEL OF DISTANCE
LEARNING IS HERE TO STAY AT
ALL LEVELS OF EDUCATION
SHOULD GET BETTER
EDUCATION
RE-MADE

26.
HIGH SPEED INTERNET
NOW A NECESSITY
CONTINUED EXPANSION OF
CABLE PROVISION
BUT NEW PROVISION – LOW
ORBITING SATELLITES
FULL INTERNET BY 2030?
INTERNET
EXPANSION

27.
TELE-WORKING
8% PRE-VIRUS
60% AT PANDEMIC PEAK
20% - 30% LONG-RUN LEVEL
WATCH HOW INTERNET IS
PROVIDED
WORK – HOME
BALANCE

28.
DRONE DELIVERY OF
PRODUCTS; INTERNET
DELIVERY OF SERVICES
AVOIDS FACE TO FACE CONTACT
NEXT: 4D HOME MANUFACTURING
IMPLICATIONS FOR
CONTROL OF THE SKIES

29.
RECONSIDERATION OF
RESIDENTIAL LOCATION
“DISTANCE IS DEAD”
PROXIMITY TO WORK,
SCHOOLS, SHOPPING NO
LONGER NEEDED
“NEW FARM LIFESTYLE” ON
CHEAPER LAND
INTERNET FROM THE SKY?
WHERE IS HOME ?

30.
IMPLICATIONS FOR NORTH CAROLINA
NORTH CAROLINA HAD A STRONG ECONOMY IN 2021
– RECORD JOB GROWTH; BIGGER GAIN IN PRODUCTION THAN THE NATION; $10 BILLION ANNOUNCED INVESTMENTS
CONTINUED GROWTH –PERHAPS ACCELERATED – 13 MILLION POPULATION IN 2030 RATHER THAN 12 MILLION
NORTH CAROLINA CONSIDERED A “SAFE STATE”
LOOK FOR SUBURBS TO HAVE FASTEST GROWTH
NEXT GAME-CHANGER – UNIVERSALLY AVAILABLE HIGH SPEED INTERNET – COULD SPARK A RURAL REVIVAL

31.
AVAILABLE ON
FEBRUARY 22
RELAUNCH: RENEWING FAMILIES AND
REVIVING THE AMERICAN DREAM IN
THE NEW INDEPENDENT LIFESTYLE
MICHAEL L. WALDEN

32.
Annual Economic
Conditions Survey
February 2022 - 103 Responses

33.
2
Organization Size
1-5 employees, 41%
6-50 employees,
42%
50+ employees,
17%
Feb 2022 Chamber Member Survey

34.
How has the current state of the
economy affected your organization?

35.
Percent of Enterprises Reporting the Current Economy is
Negatively Impacting their Organization Declines to 20%
4
44%
56%
39%
52%
32%
22%
8%
3% 2% 4%
32%
20%
0%
10%
20%
30%
40%
50%
60%
2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022
Feb 2022 Chamber Member Survey
“How has the current state of the economy affected your organization?”

36.
Percent of Enterprises Reporting the Economy is
Positively Impacting their Enterprise Rises to 38%
5
“How has the current state of the economy affected your organization?”
6% 5%
12%
17%
32%
28%
57%
73% 71% 69%
28%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022
Feb 2022 Chamber Member Survey

37.
How Has the Current State of the Economy
Affected Your Organization?
6
20%
42%
38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022
Negatively Not Much Positively
Feb 2022 Chamber Member Survey

38.
How Has the Current State of the Economy
Affected Your Organization?
7
43.6%
19.6%
50.4%
42.2%
6.1%
38.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022
Negatively Not Much Positively
Feb 2022 Chamber Member Survey

39.
Same Storm, Different Boats (Feb 2021)
6.8
5.9
5.84
5
4.7
4.6
4.5
4.5
4.5
4
4
4
3.6
3.5
2.2
2
1
1 2 3 4 5 6 7 8 9 10
Construction & Manufacturing
Professional Services (Finance, Insurance, etc)
Real Estate/Rental/Leasing
Government/Public Sector
Education
Transportation
Arts, Entertainment, and Recreation
Communications
Nonprofit/Social Services
Healthcare
Information Technology
Other Services (HVAC, Mechanic, etc)
Retail
Utilities
Personal Services (Hair, Nail, Fitness, etc.)
Food Service/Drinking Places
Accommodations
Average: 4.7
1 = Very Negatively
5 = Neutral
10 = Very Positively
“How has the current state of the economy affected your organization?” (2021)
Feb 2021 Chamber Member Survey

40.
2.0
3.0
4.7
4.7
4.9
5.0
5.0
5.0
5.3
5.4
5.9
6.0
6.0
6.5
6.7
7.0
7.5
0 1 2 3 4 5 6 7 8 9 10
Accommodations
Personal Services (Hair, Nail, Fitness, etc.)
Communications
Utilities
Food Service & Drinking Places
Education
Healthcare
Retail
Other Services (HVAC, Mechanic, Plumbing,…
Government/Public Sector
Arts, Entertainment and Recrecation
Non-Profit/Social Services
Religious Institution
Transportation
Professional Services (Finance, Insurance,…
Construction/Manufacturing
Real Estate/Rental/Leasing
Same Storm, Different Boats (Feb 2022)
Average: 5.7
1 = Very Negatively
5 = Neutral
10 = Very Positively
“How has the current state of the economy affected your organization?” (2022)
Feb 2022 Chamber Member Survey

41.
Impact of the Economy Varies Little by Size of Enterprise
Feb 2022 Chamber Member Survey
5.83 5.65 5.35
1
2
3
4
5
6
7
8
9
10
Micro Enterprise (1-5
employees)
Mid-Size Business (6-50
employees)
Large Business (50+
employees)
How has the current state of the economy affected your organization? (2022)
1 = Very Negatively 5 = Neutral 10 = Very Positively

42.
Do you expect sales to increase or
decrease over the next 12 months?

43.
76% of Respondents Expect Sales to Increase in
the Next 12 Months
76%
22%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Increase No Change Decrease
Feb 2022 Chamber Member Survey
“Do You Expect Sales to Increase or Decrease Over the Next 12 Months?”

44.
…but that’s what we always say
76%
22%
2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2016 2018 2019 2020 2021 2022
Increase No Change Decrease
Feb 2022 Chamber Member Survey
“Do you Expect Sales to Increase or Decrease Over the Next 12 Months?”

45.
Do you plan to add or reduce
workers over the next 12 months?

46.
68%
31%
of respondents have
NO PLANS TO ADD
or reduce workforce
1% of respondents plan to
REDUCE workforce
of respondents plan
to ADD workers
Feb 2022 Chamber Member Survey
“Do You Plan
to Add of
Reduce
Workers
in the
Next 12
Months?”

47.
68% of Respondents Plan to Add Workers in 2022
36%
40%
30%
40%
46%
54%
44% 45%
52%
68%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2012 2013 2014 2015 2016 2018 2019 2020 2021 2022
Feb 2022 Chamber Member Survey
“Do You Plan to Add or Reduce Workers Over the Next 12 Months?”

48.
Would you say that local
government here is pro-business,
neutral, or anti-business?

49.
Belief Local Government in Pro-Business Increases
Feb 2022 Chamber Member Survey
62%
15% 18%
65%
21%
14%
0%
10%
20%
30%
40%
50%
60%
70%
Somewhat or Very Pro-
Business
Neutral Somewhat or Very Anti-
Business
2021 2022
“Would you say local government here is pro-business, neutral, or anti-business?”

50.
Respondents Believe Local Government is Pro-Business
Feb 2022 Chamber Member Survey
18%
48%
21%
12%
2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Very Pro-Business Somewhat Pro-
Business
Neutral on Business Somewhat Anti-
Business
Very Anti-Business
2022
“Would you say local government here is pro-business, neutral, or anti-business?”

51.
Percentage of Respondents Who View Government as
“Very Pro-Business” Dips from 2021 High
Feb 2022 Chamber Member Survey
14%
11%
13%
6%
10%
22%
18%
0%
5%
10%
15%
20%
25%
2015 2016 2018 2019 2020 2021 2022

52.
In three words, how would you
describe your organization's current
financial condition?

53.
“In three words, how would you describe your
organization's current financial condition?”

54.
“In three words, how would you describe your
organization's current financial condition?”
(Most Frequent Words)
Stable Good Strong Steady
Struggling Growing Improving Growth

55.
In three words, how would you
describe your organization's current
economic outlook?

56.
“In three words, how would you describe your
organization's current economic outlook?”

57.
“In three words, how would you describe your
organization's current economic outlook?”
(Most Frequent Words)
Positive Optimistic Hopeful Cautiously
Good Growth Strong Cautious

58.
“Other than ending the pandemic,
what does your organization need to
be successful in 2022?”

59.
“Other than ending the pandemic, what does your
organization need to be successful in 2022?

60.
Questions and Discussion