Economic forecast by Western students predicts continued expansion, prosperity

CULLOWHEE — Strong economic growth with continued expansion, prosperity and low employment should persist in North Carolina and the United States through the year 2001.

That’s the prediction from a team of business students at Western Carolina University. The Alan Greenspans-in-training recently completed a new North Carolina Economic Survey, a comprehensive study examining regional, statewide and national business trends to forecast economic conditions for the coming year and beyond.

The survey, conducted each spring by students in a WCU course in money, financial markets and economic policy, is based on statistical methods of econometrics used to analyze data and formulate forecasts. The project is directed by Robert F. Mulligan, visiting assistant professor of economics, finance and international business.

The students predict the U.S. gross domestic product will increase 2.5 to 3.5 percent in 2000 and 2.8 to 4.9 percent in 2001, Mulligan said. “Industrial production is expected to increase robustly, by 4 percent for the rest of 2000 and by nearly 5 percent in 2001. A 3 to 6 percent annual increase in real consumption expenditures is forecast over the next two years,” he said.

U.S. unemployment is predicted to average approximately 4.5 to 4.6 percent for the next two years, but is predicted to rise to its consensus natural rate of 6 percent by 2005, Mulligan said.

North Carolina unemployment, currently around 3 percent, will rise to 4.5 to 4.6 percent over the next six years, the students suggest. Unemployment in South Carolina, already a low 3.9 percent, should fall by a another three-quarter percent over the next two years, the forecast indicates.

Elsewhere in the Southeast, according to the students’ findings:

— Georgia unemployment should fluctuate between 3.9 and 4.4 percent over the next two years.
— Kentucky unemployment should fall by one-third, from 4.25 percent in January 2000 to 2.84 percent by December 2002.
— Tennessee unemployment is expected to remain below 4 percent for the next two years.
— In contrast, Mississippi unemployment is projected to remain at a comparatively high level, around 5 percent for the next two years.

The students also examined the three-month treasury bill rate, and they predict the rate to rise to 6.1 percent by the end of 2001, with inflation predicted to remain at approximately 2 percent for the next two years.

The North Carolina Economic Survey is published on the Internet and may be viewed at ( – link no longer active). The Western Carolina University College of Business is accredited by the International Association for Management Education (AACSB), a distinction shared by only 25 percent of college business programs in the nation.

Students who participated in the project are Candice Ammons, Franklin; Nicole Baker, Swannanoa; Teddis Holbrook Beasley, Charlotte; Helen Callahan, Sylva; Shannon Canter, Mocksville; Caleb Decker, Clyde; Ryan Donnelley, Cary; Edward Peter Eich, Charlotte; Erik Ekeberg, Blairsville, Ga; Chris Elbert, Siler City; Jill Franklin, Asheville; Kevin Greene, Shelby; Amber Head, Highland, Ill.; Ken Hill, Charlotte; Mindy Hovis, Iron Station; Leslie Johnston, Denver; Jeremy L. Jones, Ellenboro; Chris Lassiter, Marietta, Ga.; Michelle Loftus, Weaverville; Brenda Luther, Fairview; Jack Metcalf, Chapel Hill; Valerie Metz, Asheville; Eric Nelson, Knoxville, Tenn.; David Parks, Statesville; Traci Pudelski, Franklin; C. Jason Quick, Charlotte; Kevin Rink, Apex; Jason Spainhour, Lillington; and Ye Yang, Hickory.

For more information, contact Robert F. Mulligan at (828) 227-3329, or