Dr. John Connaughton speaks during the North Carolina Economic Forecast for 2022-2023 | New

Dr. John Connaughton, a professor of financial economics at the Belk College of Business, spoke during North Carolina’s quarterly economic outlook for 2022-23.

An economic forecast is used to predict the economy and can be done at the national or local level.

According to forecasts, the 50/50 probability of a recession in 2022 now increases to 75/25 in 2023.

On September 22, 2022, Connaughton pointed out that NC’s annual real gross domestic product (GDP) (adjusted for inflation) is expected to grow 2.1% more than in 2021. In addition to an increase in GDP Real, for 2022, NC businesses are expected to create 162,400 net jobs, an increase of 3.4% from 2021.

“The disconnect between GDP growth and some of the sectors that are struggling in terms of growth and some that are doing well and employment where we see a growth rate of 3.4%,” Connaughton said. “The employment growth rate is almost double the GDP growth rate.”

According to the economic forecast report, the year 2023 is also expected to see an increase of 1.8% in real GDP compared to the year 2022.

The report captures the top 15 employment sectors and the type of business they are, with the highest expected growth rates for 2022-2023, with the main sector being hospitality and leisure services for both years.

For the 2023 GDP growth rate, Connaughton expects growth in all quarters of the year, but says, “Much of it will depend on what the FED [Federal Reserve] done with interest rates in 2023. For now, that’s unclear.

Forecasts predict the creation of approximately 74,000 net jobs between December 2022 and December 2023, less than half of the net jobs created in 2022.

All employment sectors are expected to experience growth in 2023. However, the total unemployment rate is expected to increase to 3.9%.

The FED takes into account various employment factors to calculate the neutral interest rate.

A neutral interest rate is one in which monetary policy neither stimulates nor restrains economic growth and keeps output growth around its potential rate with full employment and stable inflation. The FED had its estimates on what it is.

“We expect the next two meetings this year to see 50 basis points [rate change] every meeting,” Connaughton says. “So by the end of the year, we will be looking to achieve what they think is the neutral rate where the fed funds are between 4 and 4.25%. The question is: what do they do after that? This will lead to whether we end up in a recession or not. »

The next economic forecast will take place on December 7, 2022. The event is virtual, free and open to the public; however, attendees must pre-register for zoom information.