Aug 2, 2022 - Business

Rising prices hit Triangle's surging economy

Dix Park
Downtown Raleigh's skyline as seen from Dorothea Dix Park. Photo: Zachery Eanes/Axios

The Research Triangle's economy remains in a favorable place, despite a national downturn in the first half of the year, Tom Barkin, president of the Federal Reserve Bank of Richmond, told Axios.

  • However, inflation is hurting the pocketbooks and sentiment of consumers, especially those with lower incomes, and Raleigh’s housing market continues to see high prices, he said.
  • If inflation doesn't cool, he added, the Fed will continue to raise interest rates to combat it.

What's happening: The U.S. economy contracted in the first six months of the year, meeting one common definition of a recession, though not a technical one.

  • Barkin shied away from saying the word recession. But he noted demand has certainly softened across the board.

Why it matters: Consumers aren't ramping up their spending like they were, businesses are taking a pause on investment, and housing is slumping. That is a recipe for a serious downturn in the second half of the year, whatever terminology we use, Axios' Chief Economic Correspondent Neil Irwin reports.

That downturn could look much different in Raleigh, where businesses and people have been flocking in recent years, compared to other parts of the county.

  • Raleigh remains a place people to which businesses want to move, and it has several different industries expanding, including pharmaceuticals and auto makers, Barkin said.

What they're saying: "I think quality growth is always good for an economy and when I say quality growth, I mean: attracting businesses, retaining businesses, developing businesses, creating a highly educated workforce and attracting new people into the community," Barkin said.

  • "And that's what I see in Raleigh, and also Charlotte, doing at scale."
  • He added the Triangle also doesn't look over leveraged with debt, like many regions were during the 2008-2009 recession.

What we're watching: Commodity prices have declined in recent months and supply chains are beginning to catch up, which should help put a check on inflation.

  • "The question is just how much will it bring inflation down and how fast," he said.
  • "And in the interim, we've got to move rates in a way that does restrain demand … and the pace of that I think depends on what happens with inflation."

What's next: The next Consumer Price Index report will be released August 10.

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