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


Overall Economic Activity
After performing quite well over the first half of the decade, growth in the local economy slowed. Over the period 2002-2007, the annual compound growth rate in the local economy was around 5.6 percent. Were this growth rate to continue indefinitely into the future, the local economy would double in size in around 13 years. More recently, after rising 5.7 percent in 2006, total economic activity in the coastal region of Brunswick, New Hanover, and Pender Counties rose only 2.7 percent over 2007. Activity is forecast to grow 2.5 percent over both 2008 and 2009.

Several factors have contributed to and are continuing to contribute to this lower growth rate. Retail sales tax collections have shown mixed results over the past year. Single-family home sales, accounting for the bulk of all real estate sales, fell approximately 50 percent between mid-2005 and third quarter 2007. Since then, these sales have remained relatively stable at around 400 units per month. The real estate development sector accounts for almost 20 percent of total area employment and slightly less than 25 percent of total labor income. Despite this slower growth, the local economy is forecast to grow faster than both the state and national economies over 2008 and 2009.

Unemployment
The 2007 average monthly unemployment rate was 3.7 percent in New Hanover County, 4.6 percent in Brunswick County, 4.2 percent in Pender County, and 4.7 percent in North Carolina. Area unemployment rates rose over the first nine months of 2008. The September 2008 seasonally adjusted unemployment rate in New Hanover County was 5.9 percent, up from 3.9 percent in September 2007 and the highest since June 2003. The rate in Brunswick County was 7.7 percent, up from 4.7 percent in September 2007 and the highest since July 1996. The Pender County rate was 7.0 percent, up from 4.3 percent in September 2007 and the highest since July 2003. The September 2008 seasonally adjusted rate for the state was 7 percent, up from 4.8% in September 2007 and the highest since April 2002.

Retail Sales Tax Collections
New Hanover County retail sales tax collections fell 2.7 percent between 2006 and 2007 to $125.9 million. They fell 2 percent in Wilmington to $104.4 million. Collections rose 3.7 percent in Brunswick County to $41.4 million but fell 7.1 percent in Pender County to $10.5 million. Statewide, collections fell 0.5 percent to $5.6 billion.

For the year ending July 2008 (August 2007-July 2008), collections were down 5 percent in New Hanover County to $122.7 million. They were down 5.1 percent in Wilmington to $101.9 million. Collections were up 0.6 percent in Brunswick County to $41.5 billion but down 3 percent in Pender County to $10.3 million. Statewide, collections were up 0.4 percent to $5.5 billion.

Vehicle Registrations
New vehicle registrations fell 5.8 percent in New Hanover County between 2006 and 2007 to 11,060. They fell 1.5 percent in Brunswick County to 5,360 and were unchanged in Pender County to 2,160. Statewide, they fell 0.7 percent to 462,450.

For the year ending July 2008 (August 2007–July 2008), new vehicle registrations in New Hanover County were down 10.9% percent to 9,980. They were down 5.9 percent in Brunswick County to 5,080 and 10.1 percent in Pender County to 1,950. Statewide, new vehicle registrations were down 8.2 percent to 428,890.

Trucks outsell cars by a margin of 14 percent in Brunswick County, 7 percent in New Hanover County, and 32 percent in Pender County. Statewide, the margin is 3 percent.These margins are substantially lower than comparable year-earlier figures.

Air/Port Traffic
Container tonnage through the state port facilities at Wilmington rose 21.4 percent between 2006 and 2007 to 1.3 million tons. For the year ending August 2008 (September 2007-August 2008), this tonnage was up 14.7 percent to 1.4 million tons. The North Carolina State Ports Authority is planning on the construction of a large international container port at a site in northeastern Brunswick County along the Cape Fear River to accommodate the substantial growth in container traffic forecast for the future.

Air passenger traffic at the Wilmington International Airport rose 24 percent between 2006 and 2007 to 800,300. Passenger boardings rose 29.5 percent to 404,060, and passenger deboardings rose 24 percent to 396,240. Air cargo traffic rose 15.6 percent to 2,333.4 tons. Cargo loadings rose 15.5 percent to 925.6 tons, and cargo unloadings rose 15.6 percent to 1,407.8 tons.

For the year ending August 2008 (September 2007-August 2008), air passenger traffic was up 6.8 percent to 824,440. Passenger boardings were up 6.6 percent to 415,160, and passenger deboardings were up 7 percent to 409,280. Cargo traffic was down 5.5 percent to 2,168.6 tons. Cargo loadings were down 2.6 percent to 881.2 tons, and cargo unloadings were down 7.4 percent to 1,287.4 tons.

Real Estate Market
For the first half of 2008, the number of foreclosures in New Hanover was 57 percent above the comparable year-earlier level. There were an estimated 5.4 foreclosure filings per 1,000 population for the period (0.054%).

The number of foreclosures in Brunswick County for the same period was 128% percent above the comparable year-earlier level. There were an estimated 9.5 foreclosure filings per 1,000 population for the period (0.095%).

Tourism
Tax collections from the two 3-percent room occupancy taxes levied in New Hanover County rose 10.9 percent between 2006 and 2007 to $8.1 million. For the year ending July 2008 (August 2007-July 2008), tax collections were up 3.2 percent to $8 million.

Summary
The local economy is feeling the effects of the national slowdown. Growth in most sectors of the local economy has slowed, in some cases quite dramatically. In all likelihood, the national economy went into recession in mid 2008. The current consensus forecast for the national economy is recessionary conditions throughout 2009, with growth rebounding in early 2010 at the earliest. In contrast, the local economy is currently not expected to experience recessionary conditions over the next 12-18 months.