Something Must Change to Improve Our Economy

Published April 24, 2013

Much as we would like to think otherwise our state’s economy isn’t improving much.

It is good news that state tax revenues are currently ahead of modest projections by 110 million dollars and expectation is building as to whether we might once again experience an “April Surprise” of higher than anticipated personal income tax receipts.

We do know that sales taxes, often a measure of economic strength, are about 90 million dollars less than what was projected, a result continued high unemployment and the tax increase many experienced. Experts now predict a 3.1 percent growth in sales taxes, far less than the 6.3 percent growth experienced last year. Real estate is rebounding in some areas but not others; even so there still isn’t a great deal of new construction.

Dark clouds are hovering. We are just now beginning to see the impact of sequestration in our state. Federal and military cutbacks will negatively affect our economy in the second half of this year. But the real problem remains unemployment. While the March report showed .2 percent drop, to 9.2 percent, we are still significantly higher than the 7.6 percent national average and this rate isn’t even reflective of the true picture. North Carolina saw an increase of 64,000 jobs over the past year, but 64,500 people moved into the state and a number have just given up looking for jobs. The true unemployment rate is much closer to 17-19 percent.

North Carolina’s economy isn’t improving for three reasons:

  1. Consumers won’t spend if they don’t have money or confidence in the future.
  2. Businesses won’t hire if they don’t have confidence in government
  3. Banks won’t lend until they have confidence in the economy.

Notice the one word that repeatedly bubbles up is confidence. If you keep doing what you’re doing you’re going to keep getting what you’re getting, the oft-repeated axiom says. And we have several years’ records to show that what we are doing isn’t working.

We are repeatedly told (and at some level agree) that it isn’t government’s role to create jobs. But I’m not too old to remember hearing how the government, through WPA and PWA, did put people to work during the Great Depression. Times have changed and this probably isn’t the best way but our state can and must intercede if we are to do more than just stagger ahead, hoping things will improve.

We need to recognize that something must change….and it must be a significant enough change…to jump start North Carolina’s recovery. I believe it is time for our state to conduct a major public infrastructure campaign of at least 5 billion dollars. We have a backlog of more than 100 billion dollars in infrastructure needs, as will soon be demonstrated when the American Society of Civil Engineers, releases their report card on our state’s infrastructure. We can make a serious dent in some of those roads, bridges, water systems, public schools and Main Street needs. If we don’t do something big the needs will continue to grow faster than we attack them.  Our state can borrow money at the lowest rates any of us have known in our lifetimes, at a time when construction prices are also attractive. For every billion dollars spent in construction we’re reliably told we will create 28,000 jobs. Do the math. A 5 billion dollar infrastructure program will create 140,000 jobs….more than enough to bring down our unemployment rate. Enough to provide sales tax and income tax revenues to cities and our state.

How do we pay for this, you ask? We can find some additional savings in government. We will see grow in revenues. And we can restore confidence in our state. Let’s get NC Moving Forward.

Don’t like our plan? What’s yours?

April 27, 2013 at 6:08 pm
Russ Britt says:

Hell no not another government stimulus plan.

Lets see... The government that spent too much and taxed to much and brought down the economy, can now spend and borrow more and fix our economy?

Really guys, I thought you had to be in Colorado to smoke that stuff....

May 2, 2013 at 3:52 pm
Thurman Hubbard says:

I think this is an excellent idea many years overdue. The only thing missing is the part where we discover that the owner/employer class actually prefers all this unemployment because it keeps wages down and workers willing to tolerate almost anything and be grateful they even have jobs.