Economy.com of West Chester, Pa., said North Carolina and 29 other states have avoided a recession so far, but layoffs, unemployment and an increase in personal bankruptcies could send the state into an official recession by January.
Lisa Anderson, an Economy.com economist, said defining a recession for an individual state is not an exact science. Anderson said it is more representative to consider many factors at the state level, such as employment rates and the gross state product -- the total value of all goods and services produced in the state.
"Different people look at different indicators," Anderson said. "It is a subjective decision. Some will say North Carolina is in a recession, some will say it is only near a recession."
Anderson said North Carolina is on the verge of a recession because the textile industry has dragged down overall manufacturing in the state.
According to data from the N.C. Employment Security Commission, the state has lost 52,500 manufacturing jobs in the past year, and the unemployment rate has risen from 3.8 percent a year ago to 5.5 percent in October.
Anderson said retail is the only part of North Carolina's economy that has kept the state out of a recession, and its success could determine how long the state is able to avoid a recession.
"Although there was a sharp pullback in spending after Sept. 11, continued job services and retail trade will help keep the economy out of a recession," she said.
UNC economics Professor Patrick Conway said Economy.com's prediction is not surprising. He said encouraging consumers to spend more would not be wise because many consumers are already in debt. "Getting further into debt is not a sustainable solution," Conway said. "Recovery will occur when we have enough demand from people who are not already in debt."
Conway also said government spending normally can get the economy out of a recession, but in the case of North Carolina, the government is unable to spend because it must keep a balanced budget. He also said increasing exports would help the economy.
