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TRIAD IN MIDST OF MILD RECESSION, ECONOMIST SAYS

TRIAD IN MIDST OF MILD RECESSION, ECONOMIST SAYS

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A loss of nearly 5,100 manufacturing jobs in 1989. A $4.5 million drop in retail sales. A 10 percent drop in home building permits. Add it all up and the total for the Triad is:

A mild recession.That's the assessment of Donald Jud, a University of North Carolina at Greensboro economist who studies the Triad economy. Jud compiles the CCB Triad Business Index, which tracks economic activity in the seven-county Triad area.

Jud said the Triad experienced a mild recession in 1989 as the area was dragged down by its manufacturing sector, which suffered shocks and layoffs from corporate takeovers, mergers and restructurings.

The biggest hit in 1989 came from R.J. Reynolds Tobacco and RJR Nabisco, which cut its work force by 2,300. Most of the lost jobs came in Winston-Salem.

But the Triad was still absorbing other blows from recent years. For example, AT&T continued shutting down its 3,751-employee North Carolina Works in Forsyth County.

On Jan. 1, AT&T's total employment in Guilford, Forsyth and Alamance counties was down by 1,799 compared to Jan. 1, 1989. Most of the lost jobs were through retirements and the North Carolina Works shutdown. That number doesn't include AT&T's telephone stores and service centers.

On the bright side, AT&T announced it would open a new plant this year in western Guilford County, employing 250 people, most of whom were expected to be laid off North Carolina Works employees.

There were other losses in 1989:

Kenyon Home Furnishings, a furniture maker that employed 250 in Thomasville, went under in June amid charges of mismanagement and fraud against its top officers.

Gilbarco, the Greensboro service station gas pump manufacturer, in July laid off 150 people and it temporarily shut down its plant at 7300 W. Friendly Ave. because of slow orders.

Pilot Freight Carriers shut down in March, putting 2,600 people out of work nationally, including 650 in the Triad.

Despite the Triad's problems, the area ``came out OK' in 1989, especially when compared to expectations going into the year, said David Orr, First Union's economist in Charlotte.

But 1989 was a subpar year compared to recent experience in the Triad, he said.

Orr doesn't believe the Triad experienced a recession in 1989.

He said one measure of employment growth, which best reflects what's happening with larger employers, does show a .6 percent drop in employment for the year. But another measure, which tends to pick up self-employed people and smaller companies, shows modest growth of 1.6 percent - definitely not a recession-type figure.

For 1990, Orr doesn't even like to talk in terms of recession. Orr said that if a recession occurs, it will be so mild that only economists will be aware of it. Jud also expects such small growth in the coming year that most people won't be able to tell whether they're in a period of slow growth or a recession.

Orr predicts a ``profits recession' in the first half of 1990, compared to the first half of 1989. ``It's going to be very difficult to make profits grow,' Orr said.

For 1990, Triad area economic boosters are typically optimistic. But manufacturers also expect good things, according to recent News & Record survey.

Jud and Orr expect the Triad's performance to improve this year. But that depends on the accuracy of national economic forecasts calling for the nation to avoid recession this year, Jud said.

The Triad, because of the softness in its manufacturing sector, will perform worse than the nation as a whole, Jud said.

Meanwhile, the Triad's unemployment rate continues to be at historically low levels.

Orr said none of North Carolina's three major areas - the Triangle, the Triad and Charlotte - will see growth in 1990 like they saw in the mid-1980s but they will see some growth.

He predicted that employment growth in Charlotte and the Raleigh areas would be in the 1.5 percent range while the Triad would be in the 1 percent range.

Service sector employment - relatively more important in Charlotte and Raleigh than the blue-collar Triad - growth will slow, with 40 percent of the growth coming in the health care field, Orr said.

The Triad will benefit by the declines in the last part of 1989 of the dollar against European currencies, Orr said. A weaker dollar benefits American manufacturing by making U.S. exports more attractive overseas.

Orr expects consumers to tighten spending in 1990, putting growth in consumer spending in the 4 percent to 5 percent range - about even with inflation but a slowdown from the 7 percent to 8 percent growth of recent years.

Orr also said that losses in manufacturing aren't over. Big companies - from those in the high-tech field to those in textiles - have found that to be competitive they must do more with less people.

``What we have to do is industrial recruitment,' Orr said.

Orr expects housing starts in 1990 to be up by a modest amount, the first increase in three years.

Jud is encouraged by projections that the Triad's population will grow by .8 percent annually during the next decade, a level of growth that he describes as ``manageable.' That slow growth will give the Triad a more tranquil quality of life than faster growing Charlotte and Raleigh, he said.

Jud said the Triad's best bet is to seek to recruit businesses that can locate anywhere and so make their decisions based on quality of life considerations. If land prices remain reasonable and transportation and education are in good shape, the Triad's future should be secure, he said.

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