Positives from the Triangle Economy

Despite a difficult year for many around the nation, the Triangle (Raleigh/Cary, Durham, Chapel Hill) is holding its own during these difficult times. Unemployment is up from last year, but we have seen some positive moves with the area’s unemployment. Additionally, housing sales are starting to get stronger as we delve into the Spring and Summer buying seasons. Finally, local retailers are holding on and trying desperately to withstand this slumping economy. After all, I was at Michael Deans on Sunday for brunch and the restaurant was packed and I am sure you are seeing similar signs throughout the area at stores and restaurants. With all of this said, what is the condition of the local economy and the housing market as a whole. Will we see an improvement in the housing market and the economy? Or are we in for a long and trying depression? Some of these will be answered (or at least attempted to be answered) as you read this posting.

I am sure you have heard that our unemployment is up from last  year. This is to be expected during a recession and is not new. Businesses hire during good times and reduce staff during bad ones. Every business has a payroll to maintain while attempting to make a profit. You may have also heard that the unemployment went down in March to 8.5% from February’s 8.7%. Whether or not this is a true picture of the unemployed, the positive to take from this figure is that it is lower than the state’s unemployment rate, which is currently at 10.9%. Furthermore, the Triangle rate has dropped where the nation as a whole has increased to 9%. The Triangle, due to its diverse economy, tends to be holding strong in these troubling times which makes for a positive for the citizens of Wake, Durham and Orange counties. Compared to my home state of Michigan, whose unemployment has skyrocketed to 13.4%, up from 8.% in August 2008, we are doing wonderful.

There are many positives aspects of the Raleigh economy but just as many negatives. Many people are concerned that inflation will be a major issue in the next couple of years. Should inflation hit some of the marks that we saw during the last 70s, then we may also see the high interest rates that was experienced shortly after that in the early 80s when interest rates were in the double digits. Of course, if we see higher interest rates, then there is no telling what will happen with the housing values.

Will they fall or rise? There is no easy answer to this question and I don’t even know what will happen if we see higher interest rates. I am convinced that the reason that housing values have risen so much over the last 20+ years is directly related to the low interest rates that we have experienced for a number of years. With lower interest rates, people can afford more house. Will the opposite happen if the interest rates rise dramatically? Of course, household income has risen in the same period by nearly the same rate as housing values, so it would not have as dramatic effect, but it may cause a number of potential homeowners to be priced out of the market.

Please comment if you have any ideals about the local economy as I am open to discussion on this most important topic. For a more immediate response, please email me.