During the Raleigh Chamber's Economic Forecast for 2025, held at the Martin Marietta Center for Performing Arts, economic experts and business leaders convened to analyse the current state of the economy and project its future trajectory. The event, hosted by WRAL anchor/reporter Chris Lovingood, featured notable insights from key figures including Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, and Jay Bryson, managing director and chief economist at Wells Fargo.
Barkin expressed surprise at the current economic dynamics, stating, “No one predicted this, including me. Last year, we had a good year on inflation, unemployment and [Gross Domestic Product] growth.” Notably, Gross Domestic Product (GDP), a crucial indicator of economic health that measures the total value of goods and services produced in a country, is reflective of positive trends over the past year.
Despite these positives, the economic outlook does exhibit challenges, particularly concerning inflation. The latest Consumer Price Index indicates an increase of 2.7% compared to the same period last year, which remains above the Federal Reserve's target of 2%. Bryson remarked, “I don't think we're going to be all the way back to 2% by the end of this year, but I think we're inching closer back.”
Consumer sentiment is showing signs of recovery, with a recent McKinsey & Company study revealing that U.S. consumer optimism is at its highest level since the outset of the COVID-19 pandemic. However, uncertainty surrounds the impending policies of President-elect Donald Trump, who has announced plans to impose a 25% tariff on all imports from Canada and Mexico on his first day in office. Bryson cautioned that such tariffs could have a significant impact on inflation, stating, “If they do put tariffs on, that could raise prices for people across the country.”
Barkin also highlighted the influential role that consumer choices play on pricing. Reflecting on his own purchasing decisions, he noted that the rising costs of products like Diet Coke have led him to stop buying it. He explained, “When that happens, companies realize you can't raise prices the way you used to. That's how inflation stops. When consumers speak up and start to trade down or trade out, that's when businesses realize the pricing power is eroded.”
The economic landscape appears robust with several indicators of strength, including strong consumer spending, a resilient labour market, increased price sensitivity among consumers, and a surge in productivity rates. Barkin pointed out that while layoffs are historically low, companies are becoming more cautious about hiring.
Focusing on the Triangle region, Bryson noted its exceptional performance compared to the national economy. “The Triangle is outperforming. I think that will probably continue,” he predicted, attributing this growth to in-migration and a strong labour force.
However, challenges persist, particularly in the housing sector. Billie Redmond of Trademark Properties warned of a housing shortage. “We know there’s a housing shortage,” she indicated, stressing the importance of location for the workforce. “A lot of the workforce want to live and work close by,” Redmond explained.
The integration of emerging technologies into business practices, particularly artificial intelligence (AI), is expected to play a significant role in the economy going forward. Bryson anticipated that AI would enhance productivity, allowing for job creation in other areas, despite some displacement of workers, “There will be some people who will lose jobs. But because AI can lift productivity, it raises income and demand for jobs somewhere else in the economy.”
While uncertainty remains, the overall sentiment among economic leaders is cautiously optimistic, especially regarding the continued growth in the Triangle region.
Source: Noah Wire Services