AREA LEADERS OPTIMISTIC AFTER CHAMBER'S 2ND ANNUAL COMMUNITY UPDATE EVENT
Some 225 area leaders invested two hours on March 28 at the Chamber's second annual Community Update Event at Nash Community College to hear presentations on six key regional issues. Rocky Mount city manager Steve Raper provided a graphic look at flood recovery efforts, noting the costs of tax base revenue losses combined with maintenance expenditures for mitigated properties. Raper also provided an encouraging update on several major downtown redevelopment projects, including the new Braswell Library and renovated Train Station. Carolinas Gateway president John Gessaman detailed the Partnership's new strategic planning focus as well as advising the audience of impending job creation announcements. Dick Tharington, vice-chair of the Nash County Travel and Tourism Council, promoted the industry's $ 160 million local impact in 1999 [ranking 14th among 100 North Carolina counties] and plans for aggressive marketing to continue visitor growth. Centura Bank president Kel Landis provided some of the most promising news, as he outlined Centura's acquisition by Royal Bank of Canada, and Rocky Mount's proposed job growth as US headquarters of the new RBC Centura, which could become the seventh largest financial institution in the US. Landis noted that Centura now occupies five of the six buildings on the former Hardee's [now Centura!] campus. The update portion concluded with Nash Community College president Dr. Kathy Johnson's review of numerous workforce development initiatives in the Twin Counties, in active partnerships involving both Edgecombe and Nash Community Colleges, NC Wesleyan College, Nash-Rocky Mount and Rocky Mount Charter Public Schools, several private schools and the Rocky Mount Area Chamber of Commerce.
The event concluded with a luncheon, featuring NC State Professor Dr. Michael Walden [pictured here [C] with Chamber chairman Keith Ballentine [R] and Chamber president Charlie Glazener. An outline of his remarks, entitled " BRIGHTER ECONOMIC DAYS AHEAD?" follows:"
The economic climate has undergone a dramatic change during the past year. One year ago the stock market was up and the economy was growing at a red hot 6% annual rate. Today, the stock market is getting battered and economic growth may possibly be in recession territory. What happened? Well, the Federal Reserve got what it wanted. That is, for two years, beginning in 1998, the Fed had been trying to slow the economy. Why? Because the Fed was worried that our long and strong economic expansion would rekindle inflation, and inflation is "public enemy number 1" to the Fed. So, from mid 1998 to early 2000 the Fed increased interest rates six times to try to cool-off the economy.
By these actions, the Fed has not wanted to cause a recession. Instead, the Fed wanted to create some temporary "slack" in the economy to relieve inflationary pressures. Indeed, the Fed pursued a similar policy in 1995 which temporarily slowed the economy. After being satisfied that the inflation tiger was put a bay, the Fed then lowered interest rates in 1996 and economic growth increased.
However, two factors have been different this time. First, it took a long time for the Fed's policy of raising interest rates to take hold on the economy. Second, however, once the policy did take hold, it did so with a vengeance. Economic growth rapidly decelerated in 2000. Most economists don't think we're in a national recession now. The economy is still growing, but it's growing at a much slower rate. However, North Carolina may very well be in a recession. Due to our heavier reliance on manufacturing, our economy tends to get hit harder during an economic downturn. However, the good news is that once an economic recovery begins, North Carolina's economy should take-off.
Most regions of our state have been affected by the economic slowdown. In the Rocky Mount MSA, the unemployment rate is over one percentage point higher from its recent low last April, and 3000 jobs have been lost since August. Will this be a short or long slowdown? I think short, for two major reasons. First, the Federal Reserve is now actively trying to boost the economy through interest rate cuts. I think more cuts are on the way. Typically, the economy responds to interest rate cuts with a six month lag, so this means economic growth should be stronger in the second half of the year.
Second, our economy is fundamentally strong. We have low inflation, strong growth in labor productivity, a focus at every level on education, the best technology and research and development in the world, and even the federal government has budget surpluses. I think brighter economic days are ahead as long as we focus on the economic fundamentals. Today's condition is a temporary "speed bump" on the road to a higher standard of living.
