by William W. Hall, Jr., Senior Economist
Center for Business and Economic Services
Cameron School of Business, UNCW

Overall Economic Activity
After growing 6 percent over 2006 and 3 percent over 2007, overall economic activity in Brunswick, New Hanover, and Pender Counties rose less than 1 percent over 2008. Had it not been for growth during the first and third quarters of 2008, local economic activity would have declined for the entire year. Several factors were behind this much lower growth rate, including decreases in retail sales and in sales of existing single family homes. Combined, these two sectors account for one-fourth of all employment and almost 30 percent of total wages and salaries in the local area.

Economic activity is forecast to show 1 percent growth over 2009. Activity is forecast to be flat through 3Q2009 with modest growth resuming during 4Q2009.Activity is forecast to grow 4% over 2010.

Unemployment
Area county unemployment rates are at record highs.The 2008 average monthly unemployment rate in Brunswick County was 6.8 percent, the highest in six years. The 2008 New Hanover rate of 5.4 percent and the Pender County rate of 6.4 percent were the highest in five years. The 2008 North Carolina rate of 6.4 percent was the highest in six years.

The September 2009 seasonally adjusted unemployment rate in Brunswick County was 11.8 percent, the highest in 25 years. The September 2009 New Hanover County rate of 10 percent was the highest in 25 years as was the September 2009 Pender County rate of 12 percent which matched the previous 25-year high set in March 2009. The September 2009 state rate of 11.6 percent was the highest in at least 25 years. The unemployment rate is a lagging indicator and will likely remain high, if not increase, even after a recovery is firmly in place.

Retail Sales
On a 12-month moving total basis, Brunswick County sales have been falling since October 2008.New Hanover County sales have fallen since February 2008. Pender County sales have fallen since November 2007.NC sales have fallen since November 2008.

Brunswick County retail sales fell 3 percent to $938.8 million between 2007 and 2008. They fell 5.8 percent in New Hanover County to $2.8 billion, 8.9 percent in Pender County to $223 million, and 2.5 percent statewide to $106.1 billion.

After decreasing throughout 2008 and into first quarter 2009, second quarter 2009 saw sales increase 9.2 percent in Brunswick County, 0.7 percent in New Hanover County, and 11.1 percent in Pender County.Statewide, sales rose 3.3 percent during second quarter 2009.

For the year ending July 2009 (August 2008-July 2009), retail sales in Brunswick County were down 9.6 percent to $878 million, 13 percent in New Hanover County to $2.5 billion, and 10.1 percent in Pender County to $214.7 million. Statewide, they were down 11.3 percent to $97.5 trillion.

Air/ Port Traffic
Air passenger traffic at the Wilmington International Airport rose 1.8 percent between 2007 and 2008 to 814,660. Passenger boardings were up 1.5 percent to 410,180, and passenger deboardings were up 2.1 percent to 404,470. The only quarter of 2008 in which passenger traffic rose was the second quarter.

For the year ending September 2009 (October 2008-September 2009), total passenger traffic was down 4 percent to 796,560. Passenger boardings were down 4.5 percent to 399,920, and passenger deboardings were down 3.6 percent to 396,640. Following declines in the last half of 2008 and into the first quarter of 2008, passenger traffic has risen over the past two quarters. On a 12-month moving total basis, air passenger traffic has been falling since February 2009.

Air cargo traffic fell 10.5 percent to 2,089.2 tons between 2007 and 2008. Cargo loadings fell 8.3 percent to 849 tons, and cargo unloadings fell 1.9 percent to 1,240.2 tons.

For the year ending September 2009 (October 2008-September 2009), total cargo traffic was down 19 percent to 1,786.9 tons. Cargo loadings were down 16.3 percent to 745.6 tons, and cargo unloadings were down 20.8 percent to 1,041.3 tons. Following a sizable decline over the first quarter of 2009, traffic rose over the second and third quarters. On a 12-month moving total basis, air cargo traffic has been falling since September 2008.

Following substantial increases over fiscal years 2006/07 and 2007/08, container tonnage through the Wilmington state port facilities has been quite volatile over the past 18 months. After falling during the first quarter of 2008, it rose during the second quarter, only to fall over the reminder of the year. It rose quite rapidly over the first half of 2009.

Tourism
New Hanover County levies two 3 percent room occupancy taxes. The revenues from each tax are earmarked for different purposes.

Collections from the two taxes combined (not seasonally adjusted) fell 3.7 percent between 2007 and 2008 to $7.8 million ($130.1 million in rental revenues). For the year ending June 2009 (July 2008-June 2009), collections were down 8.7 percent to $7.4 million ($122.6 million in room rental revenues). Year-over-year declines have been occurring since September 2008.

New Hanover County Real Estate Market
Data on sales of existing homes in the area served by the Wilmington Regional Association of Realtors show a general decline over the period mid-2005 through first quarter 2009, followed by a rebound during second quarter 2009. At its peak in mid-2005, the five-month centered moving average was approximately 900. At its low point during first quarter 2009, average sales were approximately 250, a decline of more than 70 percent.

The average price peaked during second quarter 2007 at approximately $272,000. The first quarter 2009 average price of approximately $219,000 was almost 20 percent lower.

Brunswick County Real Estate Market
Sales of existing single family residences in Brunswick County show a general decline over the period mid-2005 through year-end 2007. There was substantial volatility over 2008 with sales rising through the third quarter and then falling through first quarter 2009. Sales rose during second quarter 2009. At its peak in mid-2005, the five-month centered moving average was around 360. At its low point at year-end 2007, the average was approximately 90, a 75 percent decline.

The average price peaked at approximately $352,000 during mid-2007. The mid-2009 average price of approximately $225,000 was more than 55 percent lower.

Summary
Unlike the four previous downturns in national economic activity dating back to early 1980, the local economy has been hard hit by the most recent national recession which dates from December 2007.The years 2008 and 2009 have shown and will show the lowest local growth in more than two decades.

There are several signs that local economic activity is stabilizing. The fall in retail sales is slowing, and sales will likely strengthen by the beginning of fourth quarter 2009.After being hard hit during most of 2008, container tonnage through the Wilmington state port facilities is rising. The residential real estate sector likely bottomed out during first quarter 2009. The national, state, and local economies are all forecast to exit the recession by late 2009.

Although the 1 percent forecasted local economic growth for 2009 is low by historical standards, it compares favorably to the 2.4 percent decrease forecast for the national economy over 2009 and the 1.5 percent decrease forecast for the state economy over 2009. Going forward to 2010, the 4 percent local growth forecast compares quite favorably to a national forecast of 2.4 percent growth and a state forecast of 1.5 percent growth.

For quarterly updates on the national and local economies, visit http://www.csb.uncw.edu/cbes/ and click Quarterly Economic Barometer.