As inflation continues to take blows at Onslow County residents’ pockets, the evidence of a pending recession shows us times will not get any easier in the near future.
According to David Wilmoth, an economics professor at Coastal Carolina Community College, the current state of the economy is volatile, as economic growth has slowed down over the past six months.
“The employment levels continue to grow, with the nation finally recovering all of the jobs lost from the 2020 recession, and the unemployment rate is at an extremely low 3.5%,” Wilmoth said. “However, with inflation rates extremely high at 8.5%, combined with the efforts by the Federal Reserve to tame inflation by raising interest rates, a recession is a real possibility for 2022. I think there is approximately a 30-40% chance of this happening this year.”
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The National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity that is spread across the economy and that lasts more than a few months.
Although most recessions are brief, the NBER says the time that it takes for the economy to return to its previous peak level of activity may be quite extended.
“If it happens, I would anticipate a mild recession with a fairly quick recovery, not nearly as deep as 2020 or as long-lasting as 2008,” Wilmoth said.
Jacksonville-Onslow Economic Development Executive Director Mark Sutherland said Onslow County’s economy is as strong as it has ever been. As reported by JOED’s annual “State of the Local Economy” event in May, Sutherland said Onslow has surpassed 33 other N.C. counties in wage growth since 2018.
He said Onslow County’s overall poverty rate is down 27%, and the number of children living in poverty is down 30% over the last decade.
In addition, Onslow’s sub-prime lending population continues to fall, which Sutherland said means the credit worthiness of citizens has improved, a key indicator of the growth of a community’s personal wealth.
Onslow County’s median household income has also been lower than the state average for generations, but it’s now catching up.
Sutherland said Onslow’s 3.5% unemployment rate is essentially full employment, and the county recovered from the pandemic-era high unemployment rates much faster than the state.
“There may be a recession on the horizon nationally, most economists I follow suggest perhaps early in 2023, but as in the past, our community will fare much better than the state and nation,” Sutherland said. “The daily dose of pensive speculation presented on national news platforms is inconsistent with my experience and view of the local economy, which remains entirely positive.”
Sutherland said they are engaged in some of the most significant industry recruiting projects the community has seen in a couple of generations, with these companies preparing to make huge investments, creating hundreds of new jobs at above-average wages, and expanding the property tax base.
On top of that, Sutherland said Onslow County’s existing industries are thriving, and some are investing heavily in expanding their production capacity.
“We are continually impressed by the adeptness our local industry leaders show at both long-term and crisis planning,” Sutherland said. “They have survived market volatility, disasters, labor shortages and a pandemic. They are wholly prepared to survive. I think that as has always been the case here locally, we will be largely insulated from the most profound effects of a national recession.”
Owner of Brewed Downtown in Jacksonville, Michelle Smith, said she’s started to see some impacts of a possible recession.
Although she thinks part of the current problems are due to kids going back to school and money being spent on school supplies, she’s also seen fewer customers buying her more expensive sandwiches.
“They used to buy reubens and roast beef, and now they’re buying egg salad, chicken salad,” Smith said. “They’re still coming in, they just aren’t spending as much. I’m hoping I don’t have to raise prices.”
Wilmoth emphasized that higher inflation and rising interest rates may result in a decrease in consumer spending, as well as housing and business investment purchases for the second half of 2022.
Traditionally, she said, the biggest impacts would be in the housing and auto industries, with most retail areas also feeling the effects.
“Right now, we’ve been pretty lucky,” Smith said. “It’s a lot more work on me but I do my due diligence to try to find as many things that I can at a better price that still has the quality. I just don’t want to have to raise prices because I think I’m going to pretty much price myself right out. I’ve had to cut back on my staff because again, the people aren’t spending like they were spending. I’ve got two that are job sharing.”
Smith said the resurgence of local COVID cases hasn’t helped. However, she said she’s lived through about six recessions in her life, so she’s experienced with how to handle them.
Some of the things Smith said she has done is pair down their menu and simply not buy things she can’t get at a good price. Many new business owners, though, may not be as prepared.
“I think a lot of business owners, especially new business owners, put a lot of their time in decorating and making sure the place is pretty than worrying about what you have in stock,” Smith said. “I’m not prepping as much ahead so that I don’t have as much waste. You kind of have to watch your ebb and flow, I’m watching around the paydays, I’m not going to order this and I’m not going to order that, I’m going to try to make it.”
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For those preparing for a possible recession, Wilmoth recommends establishing or increasing their emergency savings fund, as well as paying off debt, especially credit card debt.
He adds that residents and business owners should consider updating their resumes, and consider adding bonds to their investment portfolios.
“Recessions are a part of life,” Sutherland said. “They come and go. In good times and bad, it is important that we support our local businesses. Buying local not only retains wealth in our community, a hedge against local recession, but fosters stability in local employment, tax revenues, and charitable giving.”
Reporter Morgan Starling can be reached at mstarling@gannett.com
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