The North Carolina economy grew at a rate much stronger than expected during the second half of 2014 signaling significant potential growth in 2015, UNC Charlotte economist John Connaughton reported Tuesday, Dec. 9, in his quarterly forecast for the state.
According to Connaughton, much of the economic growth in 2014 can be credited to a spike in N.C. Gross State Product (GSP) during the third quarter. The N.C. Gross State Product (GSP) is expected to record an annualized real growth rate of 3.3 percent in the third quarter, a 1.4 percent increase over the originally reported 1.7 percent in September 2014.
Connaughton, the Babson Capital Professor of Financial Economics in the UNC Charlotte Belk College of Business, attributed the unexpected growth in the second half of 2014 to two diverse factors.
“First, the Federal Reserve is continuing to keep interest rates low. With no sign of inflation, the Federal Reserve will have little pressure to increase rates during 2014.
“The second contributing factor is the dramatic decline in oil prices over the past several months,” he continued. “After a recent peak at the end of June to $103, oil prices have consistently declined to less than $70 today. As a result, gasoline prices have dropped by $.75 since June. The decline of gas prices puts an additional $150 billion of discretionary income into consumers’ pocketbooks annually.”
Connaughton cautioned that positive economic increases in 2015 could be offset by a slowing global economy and the potential for gas prices to stabilize. The economics professor presented his quarterly forecast to members of the Charlotte business community and the media at a luncheon held at UNC Charlotte Center City. The forecast is funded by Babson Capital Management LLC.
The full forecast report is online.