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NC economists predict growth in 2023, remark on Silicon Valley bank failure's impact on interest rate hikes

UNC Charlotte's Belk College of Business hosted the NC Economic Forecast, with expectations for GDP, unemployment & impacts from current financial sector events.

CHARLOTTE, N.C. — Charlotte-area experts believe North Carolina's economy will grow this year, with gross domestic product (GDP) increasing 1.6% since 2022.

Those expectations and others pertaining to the economic climate were topics of discussion in the First Quarter 2023 North Carolina Economic Forecast, which UNC Charlotte's Belk College of Business released Thursday.

 John Connaughton, professor of financial economics, and Jeffrey Roach, senior vice president and chief economist with LPL Financial, gave presentations and also took questions on current events from the financial sector.

The collapse of Silicon Valley Bank over the weekend was on the minds of many.

Connaughton said he expects the Federal Reserve to consider the bank's failure in upcoming discussions on hike interest rates further. The Fed started raising rates last year in attempts to slow inflation.

“The failure of Silicon Valley Bank has brought into question future interest rate hikes," Connaughton said. "In the short term, the Fed is going to have to balance the need to increase interest rates to fight inflation with the increased risk to the financial sector associated with higher interest rates."

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He also warned against reactionary and rash money moves.

"Please do not go to the bank and take your money out," Connaughton said, noting that refraining from pulling one's money would be "a social good."

Roach said he believes Silicon Valley Bank to be an isolated instance and does not expect to see other banking failures this year.

In other economic expectations for the Tar Heel State, the forecast predicts 12 of the state's 15 economic sectors to grow outputs, with agriculture possibly seeing the strongest growth.

The report says North Carolina’s unemployment rate will remain steady in 2023 at 3.9%.

Read more from the economic forecast here.

Contact Vanessa Ruffes at vruffes@wcnc.com and follow her on FacebookTwitter and Instagram  

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