For immediate useNov. 19, 1997 -- No. 869

All records will fall during Christmas shopping season, UNC expert predicts

By DAVID WILLIAMSON
UNC-CH News Services

CHAPEL HILL -- The 1997 Christmas shopping season should break all national and state sales records, according to a University of North Carolina at Chapel Hill financial expert.

“The selection of merchandise on display is the most diverse ever, and people feel good about spending money,” says Dr. James F. Smith, professor of finance at UNC-CH.

Smith discusses the state and national economies in the new issue of “Business Forecast,” a bimonthly newsletter he writes for UNC-CH's Kenan-Flagler Business School. Most N.C. businesses, except those exporting to Southeast Asia, will count record profits this year, he says.

Total personal income in North Carolina was at a seasonally adjusted annual rate of $172.9 billion for the second quarter of 1997, an increase of $11 billion, or 6.8 percent, from the same quarter of 1996, according to personal income data the Bureau of Economic Advisors released in October.

“Record income is a reflection of the record level of employment in North Carolina,” Smith says. “There were 3,812,400 people employed in the state in September and only 128,400 who wanted to work and could not find a job. This resulted in a statewide unemployment rate of 3.7 percent.”

The Charlotte-Gastonia-Rock Hill, S.C., Metropolitan Statistical Area posted a 3 percent jobless rate, the Greensboro-Winston-Salem-High Point MSA a 2.8 percent rate, Asheville a 2.3 percent rate and Raleigh-Durham-Chapel Hill only 1.9 percent.

North Carolina has benefited greatly from increases in world trade, the economist says. The state is a leader in such agricultural products as chickens, hogs, tobacco and turkeys and in many high-technology products such as computers, pharmaceutical products and telecommunications equipment. It also exports furniture, textiles and transportation equipment.

“Since export-oriented jobs tend to pay better than other jobs, this increase in the world trade competitive arena by North Carolina bodes well for future increases in personal income,” Smith says. “This is one of the reasons why personal income growth in North Carolina is well above that of the U.S. as a whole.”

Anecdotal evidence of the strength of the employment market can be found on any college campus in the country, he says. Master's of business administration students at the Kenan-Flagler Business School, for example, are attracting more and better job offers sooner than ever. The market for students to fill summer internships between the first and second year of the MBA programs is the strongest ever.

“All of this will set us up for a good beginning for 1998,” the economist says. “That will be another record year for economic activity, although the rate of increase in real Gross Domestic Product will be less than this year.

“So sit back and enjoy your Thanksgiving repast. If you are eating a turkey grown in North Carolina, then you are contributing to the health of our economy. This year is definitely one for the record books.”

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Note: Rated the nation's most accurate economic forecaster by the Wall Street Journal in 1995, Smith is a frequently quoted financial expert and teacher known for his clarity, wit and common-sense approach to economics. He can be reached at (919) 962-3176 (work and home). As time allows, he's willing to discuss most economic issues with reporters.

Contact: David Williamson