NC State’s Dr. Mike Walden – Impacts of Losing Real Estate Wealth

Everyone is looking for signs of improvement in the economy. And N.C. State University economist Mike Walden says we are seeing some in the business community.

“And one … of the things that we look at here is whether businesses are actually willing to invest their own money in things like equipment and machinery. And they’re only going to do that if they’re more hopeful about the future. And the good news is business has been doing those investments. For example, business investment and machinery was up 7 percent last year, 2011. It was up 11 percent in 2010. The biggest gains were in things like equipment and software.

“Now businesses just like households had delayed these investments during the recession. So the fact that businesses are coming back and making those expenditures, as I said, is a very good sign. It’s also going to help businesses become more efficient. It’ll help worker productivity.

“But there is a little downside here in the sense that if a business is more productive, if labor’s more productive in businesses, that means those businesses are going to need fewer workers. So the short-run cost of this optimism may be a slower-growing job force.”