Sep. 30—A special guest speaker made a visit to the Sampson County Agri-Exposition Center, as the Manufacturing Council hosted Dr. Michael Walden to give a presentation on economics that covered topics from the national level down to the county level as he shared expert analysis impacting Sampson and the state.
Serving as a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University, his 43 years as a member of the NC State faculty saw Walden become recognized as an expert on the state economy and public policy. He is a member of the North Carolina Economic Development Association, and president of Walden Economic Consulting, LLC.
Walden is also the author of 13 books, has written over 330 articles and reports, and has made at least 3,200 personal appearances. In addition to these credentials, he has frequently appeared on many major national news outlets as a contributor to the national and state media.
Walden took to the podium to inform and advise with his expertise as the attendees finished their lunches. He began his presentation by saying, "I'm very delighted to be here with you and talk about, of course, my favorite topic, the economy. So let me break this up into several sections."
"The first section is to give you a little bit of view on what's happening nationally. And that's important wherever you live in the country because we're all knitted together into a national economy," Walden said as he began.
He continued, "So things like what the Federal Reserve is doing, although that might seem far away — that certainly comes back here to Sampson County and southeast North Carolina to have an impact," further explaining the relevance of large-scale analysis as a necessary step for understanding Sampson County as a microcosm.
Walden didn't mince words expressing the impact of COVID on a nationwide economic scale, in specific economic categories, explaining, "We did have an official COVID recession in early 2020, and it was actually a fairly short recession that only lasted two quarters. But, it was very deep."
"We had an unemployment rate of 15 or 14%," he said, citing a graph of the COVID recession statistics, but clarified that, "If you look at employment, total employment, there was a rebound; we're pretty much back to work right now where we were pre-pandemic."
He shared another observation, "We saw what we call gross domestic product (GDP), which is the value of everything produced by the economy, farming, manufacturing, everything one number have fallen annualized basis of 33%. We didn't even see that during the Great Depression of the 1930s."
However, Walden's approach to the information wasn't all doom and gloom. He explained, "The good news is that we're beyond that. Now we're pretty much back to pre-pandemic levels there as well."
The selection of "farming and manufacturing" as two examples of industries that are part of the GDP initiated a connection to Sampson County, with those being cornerstones of the local economy and job market.
He moved to a more nuanced statistic to explain why the unemployment rate and GDP recoveries might not seem reflective of the situation on the ground. "Now, labor force participation," he began, "let me dwell on that a little bit."
"I should define labor force participation," he said, "It's different than employment or unemployment. What the federal government does here is it wants to assess a number that tells us, of the total number of people who could be working, what percentage are working."
"So for this definition, everyone 16 and over is considered a potential worker. Two exceptions are included — people in the military and incarcerated people. Everyone else 16 and over is a potential worker." he continued, "so, this rate measures simply how many people out of that total are either working or looking for work. That's called the labor force participation rate."
He pointed out, "There are still a lot of businesses saying, 'I can't find workers.' Part of that is tied to the fact that we're not back to the labor force participation rate we were pre-pandemic," and gave context for, "something we've never really heard about, in previous recessions: a labor shortage."
Continuing on the general national economy, Walden gave an example of having recently spoken with an editorial writer who expressed confusion, saying to Walden, "I don't understand why people are so negative about the economy; it appears to me there are a lot of good things happening to the economy."
Responding to the writer, he pointed out, "I think you're maybe missing the way that most people assess the economy. For many, it is simply that they look at their salary, and then they ask themselves, 'Am I able to buy the same things I was buying a year ago or two years ago with that salary?'"
"If the answer's no, they're only able to buy less than they could, then they're upset with the economy," he continued. "That's exactly where we are right now. If you look at increases in salaries, on average, for workers since 2020 — salaries have gone up, but the problem is prices have gone up more," he explained.
Pointing out the critical differentiation, he said, "So this takes into account 'real salaries.' That means 'adjusted for inflation,' or another way of saying it is 'purchasing power.' And, if you look at the numbers, we've actually seen 'purchasing power' or 'salaries adjusted for inflation,' whatever term you want to use, go down. In fact, right now, they're down."
"So this, this became the big economic problem once we got past the pandemic. And once we got past the economy opening up, as the economy opened up, and as jobs came back, then we have this other problem of inflation," he said as he transitioned to a discussion of inflation.
Walden kicked this off by saying, "Now, real fast — this is where I'm going to criticize anyone here from the media. Language is important, and oftentimes you'll hear in the media that when an inflation report comes out, and let's say it comes out and it says we're at 3.3% and had been 9%."
"Sometimes the media will say, 'inflation is down,' and then people will look puzzled because they'll go into the supermarket or the gas station random, they say, 'Hey, prices aren't even lower,'" he gave as an example. "People might say, 'What do you mean, improve? What planet are you living on? Prices are still higher than they were in 2020!'"
"So when we say that inflation is down, we don't mean prices are down," he explained, "We simply mean the rate of increase is less. In a conversation like that, I sort of calmly explain that prices are probably never going to get back to where they were in 2020. But, what matters is how fast they are rising."
"Now, of course, some prices do go down a bit, particularly in agriculture, but most prices won't. So, in general, we have seen an improvement in the inflation."
Turning to the supply chain, Walden explained, "Now, initially, because the economy was closed down or partially closed, and people had an influx of money from COVID relief, but couldn't spend it, or they couldn't spend a lot of it. So look at what happened when they could spend it again." He continued, "We had this massive amount of spending. When you think about business during COVID, supply chain and supply chain problems were new concepts introduced to many people."
"In economics, everything comes down to two things — supply and demand," he asserted, "The problems of a supply chain, which affected supply, combined with all the money people now had to spend, created a situation where in an economics analysis, demand was outpacing supply."
Connecting this to inflation, he said, "So, in our system, when that happens in our free market system, prices go up. So that was really the essential reason why we had such a ramp-up in inflation."
Having established the nature of these nationwide principles, Walden began to take these concepts and point out and apply the same logic on a state level and then a county level, as he focused on the impact of specific industries most relevant to North Carolina, narrowing the scope of analysis on the way to a discussion of Sampson County specifically.
"We see that the jobs are still being added. That's probably the most followed economic statistic that comes out, and again, jobs took a plunge during the pandemic before the rebound. But here we are; we're actually adding jobs. Last month, we had 187,000 jobs nationally — North Carolina, we've had 14,000, I think, and jobs are still being added."
Then Walden began, "Let's look at manufacturing trends, both nationally and in North Carolina. "Manufacturing has undergone a lot of change over the last several decades." Looking at a graph, he continued, "Going back to about 1990, you can see big drops in manufacturing employment."
He emphasized, though, "Our drops have been bigger because actually, if you look historically, manufacturing has been a bigger part of North Carolina's economy than the national level because, not only do we have normal manufacturing, we had a lot of presence in textiles, apparel, furniture, and especially tobacco manufacturing. So, we've taken a bigger drop."
"Looking at the national level, manufacturing output has trended upward. Back out in North Carolina, it's been a little bit of a downward trend recently." Walden admitted, "But that's, again, due to the fact that we've had industries in North Carolina that have been much more exposed to international trade, which is one of the key factors behind the retreat of manufacturing in the country."
"We've lost, in North Carolina, some of our historic industries that were very important," Walden said, "For North Carolina, though, it is that those sectors, particularly the textiles, apparel, and furniture, are bigger parts of our economy. So even though those specific industries have also declined on a national level, the decline here was bigger because they were more important."
Transitioning to a more hyper-local analysis, Walden said, "In terms of Sampson County, if you look at your overall manufacturing production, it has contracted this century, just like it has in North Carolina in particular. Most of that drop was due to non-durable manufacturing, presumably in your textile apparel. Durable manufacturing has also actually gone up."
He began to suggest solutions that could make a huge difference in the county, though — things to consider and look forward to that could play a bright and essential role in helping the economy.
"I'm not sure where it stands here in Sampson County," he said, "But obviously, we need high-speed internet access everywhere." This was a key facet of progress and potential for Walden.
He showed off a knowledge and understanding of the county, pointing out, "Of course, your animal industry is big, particularly hogs. There were some issues there related to waste, smell, etc. I'm aware."
He continued on a cheery note, though, "I'm also aware of some technologies, and hopefully, some development will take care of that. So, that could really be exciting if that were to happen. It would allow you to expand that vital sector."
Perhaps his favorite point to consider came when he mentioned, "I don't think you should ignore the fact that the nation and most companies are going through a discussion about work at home, and to what extent that will continue to occur."
"Raleigh is going to get a big Apple installation, I think 4,000-5,000 jobs and just broken ground, and that brings some wonderful what-ifs," he revealed. "A lot of those workers can work at least three days at home. Why wouldn't it work to move out here?"
"For example, say you think, 'I don't want to battle with traffic and Raleigh the high housing prices in Raleigh,'" as one might ponder, "Well Sampson County, Wayne County, Duplin County, they have wonderful, wonderful environments."
"'There's much lower cost housing, and I can telecommute.' So that's a possibility ... especially in North Carolina."
"And then lastly, the real way that we can bring back manufacturing from other parts of the world is simply to out-compete them in terms of efficiency and quality," Walden suggested. "Unfortunately, though, if you look at the data for the national level, we've not been doing well on those metrics, of US manufacturing, in terms of efficiency, meaning output per worker."
He doubled down on this idea of creating competitive products in Sampson County and North Carolina, though, continuing, "But, if we can up our game there and make products in our country, in our state here in North Carolina, where people around the world know 'Hey, this is a great quality product, and it's very competitive in terms of price,' that is a real potential game-changer."
