TUESDAY, May 15, 2007 — Slow growth in the national economy so far this year will pick up steam in the coming months, and the United States should experience more than 3 percent growth in its gross domestic product next year.

Those were some of the predications made by economic forecaster James Kleckley, who gave his latest forecast to about 125 members and guests at the Committee of 100 luncheon on May 3 in Sanford.

Hitting a few high points in his analysis, Kleckley said that national spending will rise slightly, the employment rate will remain steady and trouble in the U.S. housing market may continue, but is close to bottoming out. If oil prices become stable, he believes, inflation will, too.

While growth back home in the Tar Heel State depends to a large degree on what happens nationally, he sees slightly stronger growth ahead for North Carolina. "Within the state there will be winners and losers," Kleckley predicted. "But if you look at the overall economy, we will do better."

Some long-term risks could still have an impact, though. The director of the Bureau of Business Research at East Carolina University gave a short list led by volatile events in the Middle East and what affect they could have on oil prices worldwide.

Others were the large number of aging baby boomers and the availability of health care, immigration issues, the federal budget deficit and rapid economic development in China.

Lee not like other counties

No matter what happens in the national economy, Kleckley warned his audience not to assume that the same thing's taking place locally. While North Carolina's economy is becoming more like the nation's, he said, it's still true that state and local economies can react very differently from each other based on how they're structured.

As an example, he pointed to the 1990s, when North Carolina grew faster than the United States as a whole because waves of people were moving here. One decade later, fortunes flipped and the state suffered a larger recession than the nation because employment loss in the manufacturing sector hit North Carolina harder than other states.

The same thing, he says, happens among local economies within a state. Because Lee still has a substantial manufacturing base — a sector Kleckley believes will remain strong throughout the North Carolina — the county could actually experience growth while the state, as a whole, is in a recession.

The bottom line: You can't assume the local economy will behave like the broader state and national economies. And what you see on the news may not be what's really happening here.

Local leaders can change things

Local economies are obviously affected by statewide trends, but they're not at the total mercy of these massive and invisible forces. Growth also depends on what civic and governmental leaders do to help their economies perform.

"It really does depend on local leadership," Kleckley said, "on what those of you in the room are willing to do — whether you want to be proactive to help growth, proactive to keep it where it is, proactive to make things work.

"What you have in a local area really is the ability to change things. We don't have the ability to affect interest rates. We don't have the ability to affect oil prices. But we do have the ability to affect what goes on around us.

"And from our standpoint, we think that takes information. The more you know about yourself, the more you know about the others who are either your next-door neighbors or your competition, the better you're able to make decisions."

Other economic notes

* Any local impact from the federal Base Realignment and Closing Plan, Kleckley believes, could be fairly limited. A lot depends on how the military base grows over time, not just in the short term. But, he said, much of the spending occurs on the base, itself, and a good portion of money is sent out of the area back home to soldiers' families.

* The broader dip in housing starts should level off soon. Kleckley believes the decline is approaching the bottom of its cycle and if interest rates go down — as he expects they will, due to Federal Reserve action over next few months — then the housing market should stabilize.

* Lee County wages have moved closer to the state average; local residents earn about 93 cents for every dollar earned statewide. Local wages haven't managed yet to reach the average, Kleckley said, but it's better than in many other parts of the state.

Next: Howard Lee on Education

Howard Lee, chairman of the North Carolina State Board of Education, will discuss major issues in public education when the Committee of 100 meets on Wednesday, June 20, at noon. The luncheon will be held at Chef Paul's Cafe and Catering in Sanford.