covery has begun. Even

so, it is the longest, and

likely most severe, reces-

sion since World War II.

Like other severe down-

turns in our history, this

one owes to major dis-

ruptions in the financial

sector.

Recessions are com-

monly thought to be de-

clines in output and em-

ployment—some regard

them to be two consecu-

tive quarters of real GDP

declines. The National

Bureau of Economic Re-

search (NBER) is re-

garded as the official ar-

biter of business cycle

dating. They apply com-

plicated and judgmental

methods to a wide vari-

ety of production and

spending indicators.

They are said to be look-

ing for the “3 Ds”: the

depth of the contraction

its duration and its dif-

fusion (pervasiveness of

the weakness). Based on

these considerations, the

NBER has determined

that the current recession

began in December 2007.

A growing number of

analysts concluded that

the trough was reached

this summer, and the re-

What is a Recession?

UNIVERSITY OF NORTH

CAROLINA WILMINGTON

CAMERON SCHOOL OF

BUSINESS

H. DAVID AND DIANE

SWAIN CENTER FOR

BUSINESS AND ECONOMIC

SERVICES

October 2009 Volume 1, Issue 1

Economic

Barometer

Inside this issue:

What Makes Us Think that We Have Started to Turn Up?

2

Still Some Head-winds

2

The Recovery 3

Southeastern North Carolina Economic Growth

4

Retail Sales Growth Rates

4

Unemployment Rates

5

Sales of Existing Single-Family Structures

5

Room Occu-pancy Tax Growth Rates

6

ILM Passenger Growth Rates

6

www.csb.uncw.edu/cbes

Learn about our benefactors, H. David and

Diane Swain at www.csb.uncw.edu/cbes.

www.uncw.edu/swaincenter

The big negatives pulling

down aggregate output

have faded—residential

housing construction

(now, only a fourth of

its peak level) inventory

liquidation and business

spending on equipment

and software. Also,

consumption spending,

which registered an ex-

traordinary drop last

year, has begun to climb

—owing partly to fiscal

stimulus. Moreover, the

competitive position of

U.S. goods is being im-

proved by recent weak-

ness of the dollar.

Problems in the commercial real estate sector continue to mount, and the overhang of commercial

properties is depressing construction of income properties. Moreover, banks and other lenders have

become more restrictive providers of credit by continuing to tighten underwriting standards and terms.

What Makes Us Think that We Have Started to Turn Up?

Still Some Headwinds

“Consumption

spending, which

registered an

extraordinary

drop last year,

has begun to

climb recently.”

Page 2 Economic Barometer

Net Percentage Tightening Standards

April May June July August

-0.2 0.0 0.2 0.2 0.9

Change in Real Personal Consumption Expenditures (in percent)

The Recovery

Page 3 Volume 1, Issue 1

The recovery is likely to

be sluggish, at least for a

while, and may not feel as

though conditions are ac-

tually improving. It will,

over the next few quarters,

be among the most ane-

mic of the postwar period.

The expansion in output is

unlikely to prevent the

unemployment rate from

rising further over the

coming months. Unem-

ployment should start to

turn down by mid-2010.

Meanwhile, slack in the

economy can be expected

to pull inflation lower in

the foreseeable future.

Lurking on the horizon,

though, are massive

amounts of liquidity that

will need to be absorbed

by the Federal Reserve

once the expansion gains

traction — if a flair-up of

inflation is to be avoided.

Output around Postwar Troughs (Relative to Trough Level)

Over the period 2002-08, the local economy grew at an annual com-pound rate of 4.8 percent. Area eco-nomic growth has declined since 2004. There was virtually no growth in the local economy dur-ing 2008. The local economy is forecast to grow one per-cent over 2009 and four percent over 2010.

With the exception of the third quarter of 2008, area retail sales fell dramatically over the year. The decline was espe-cially large during the fourth quarter of 2008 and continued into first quarter of 2009. Sales re-bounded during the second quarter of 2009. Compared to the year ending June 2008, area retail sales are down 8-12 per-cent throughout the area and are down more than 109 per-cent statewide.

“The decline was especially large during the fourth quarter of 2008.”

Page 4 Economic Barometer

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

2002 2003 2004 2005 2006 2007 2008 2009 (F) 2010 (F)

9.4%

2.2%

9.6%

7.7%

5.7%

3.0%

0.75% 1.0%

4.0%

Source: Ravija Badarinathi and William W. Hall, Jr., Swain Center for

Business and Economic Services, UNC Wilmington

Southeastern North Carolina Economic Growth

-15%

-10%

-5%

0%

5%

10%

15%

20%

Brunswick

New Hanover

Pender

NC

Source: N.C. Department of Revenue

Retail Sales Growth Rates

After peaking in mid 2005, average monthly sales of existing single-family structures in Brunswick County (BCAR) had decreased 75 percent by year-end 2007. They rebounded through the third quarter of 2008, then fell through the first quarter of 2009, only to re-bound again dur-ing the second quarter 2009. Af-ter peaking in the second quarter

2007, average prices had fallen more than 55 percent by the second quarter of 2009. After peaking in the second quarter of 2005, Wilmington area sales (WRAR) had decreased more than 70 percent by the first quarter of 2009. They rebounded during the second quarter of 2009. After peaking in the second quar-ter of 2007, average prices had fallen 20 percent by the first quarter of 2009.

Page 5 Volume 1, Issue 1

0%

2%

4%

6%

8%

10%

12%

14%

2008 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 Aug 08

Aug 09

Brunswick

New Hanover

Pender

NC

US

Source: Employment Security Commission of NC; Bureau of Labor

Statistics, U.S. Department of Labor

Area county unem-ployment rates reached 25-year highs during the second quarter of 2009. August 2009 seasonally adjusted unemployment rates ranged from 3.7 to 5.1 percent-age points above comparable August 2008 rates. The North Carolina rate was 3.9 percentage points higher, and the national rate was 3.5 percentage points higher.

0

50

100

150

200

250

300

350

400

0

200

400

600

800

1000

WRAR BCAR

2005 2006 2007 2008

WRAR BCAR

Source: N.C. Association of Realtors

Unemployment Rates

Sales of Existing Single-Family Structures (5-Month Centered Moving Average)

Computer Information Systems

Building, Suite 1004

University of North Carolina

Wilmington

601 South College Road

Wilmington, N.C. 28403

Phone: 910-962-2237

Fax: 910-962-3579

E-mail: mackethanj@uncw.edu

The H. David and Diane Swain Center for Business and Economic Services at UNC Wilmington is the business research and outreach division for the Cameron School of Business. Center staff collect and analyze local, state, and national economic data that impact our region and its growth. The H. David and Diane Swain Center for Business and Economic Services also provides professional and executive educa-tional opportunities for organizations and professionals with major emphasis on business training, entrepreneurship and real estate.

For more information about The H. David and Diane Swain Center for Business and Economic Services, visit our Web site, www.uncw/edu/swaincenter or contact Jennifer Mackethan at mackethanj@uncw.edu.

H. DAVID AND DIANE

SWAIN CENTER FOR BUSINESS

AND ECONOMIC SERVICES

Collections from the two 3 percent room occupancy taxes lev-ied in New Hanover County have fallen since the end of the third quarter of 2007. For the year ending June 2009, collections are down almost 9 percent. This sector was es-pecially hard hit dur-ing the second half of 2008 and the first half of 2009.

H. David and Diane Swain Center for Business and Economic Services

economicbarometer@uncw.edu

www.csb.uncw.edu/cbes

Source: New Hanover County Tax Office

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Boardings

Deboardings

Source: Wilmington International Airport

Passenger boardings and deboardings at the Wilmington In-ternational Airport (ILM) have been falling since year-end 2007. These de-clines were large during the second half of 2008 and the first half of 2009.

Dr. Rosemary DePaolo

Chancellor, UNCW

Larry Clark Dean, Cameron School of

Business

Dr. William Sackley

Director of SCBES

Dr. William (Woody) Hall

Senior Economist

Dr. Thomas Simpson

Executive in Residence

Jonathan Rowe

Program Director

Jennifer Mackethan

Administrative Assistant

Crystal Cassarino

Graduate Research Assistant

New Hanover County Room Occupancy Tax

Collections Growth Rates (NSA)

ILM Air Passenger Traffic Growth Rates