You do scores of talks each year around the state. One of the frequent questions you are asked is, What has to change for the economy to improve? So, let’s ask that question in a slightly different way. What is the driving force in today’s economy? N.C. State University economist Mike Walden responds.
“Well, two forces. Consumers, consumers are at the driving wheel, if you will, of the economic car. The recession really began with consumers stopping their spending. And they stopped their spending really with a vengence.
“What consumers have done over the last five, six years is really tighten their belts, spend less, save more, pay down on debt. And because 70 percent of our economy really flows from consumer spending, consumers aren’t spending and we’re not going to have a robust economy. So, you really have to have the consumer come back number one.
“And then, what’s going to make that consumer come back? I think the housing market. Really the reason why consumers stop spending is because they lost wealth in their homes. Two-thirds of us own homes. We had a one-third drop in housing prices since 2006-2012. That meant trillions of dollars of wealth lost by homeowners. Homeowners were really shocked by that. So, they pulled in. Again, they pulled in their belts.
“So we have to have a return of the housing market, and that has to spur a return of the consumer in order to get a growing economy. And fortunately we’re seeing positives on both of those factors right now.”