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The Daily Tar Heel

State Economy's Future Remains Unclear

Michael Walden, a professor of economics at N.C. State University, said he expects lower revenue growth than previously predicted for North Carolina in light of the past week's events.

But Walden said North Carolina's citizens play a role in the state of the economy. "The key (to economic stability) is consumer confidence," he said. "If consumers are not confident they will not put money into the economy."

On Monday, the first day the New York Stock Exchange opened after last week's terrorist attacks, the Dow Jones Industrial Index dropped nearly 700 points -- one of the largest declines in U.S. history.

Two weeks ago, State Treasurer Richard Moore wrote a letter to members of the N.C. General Assembly stating that the predicted growth rates for the economy were too high.

After receiving the letter, Walden told members of the Senate that the economy appeared to be recovering from the low point of a temporary slowdown.

But in light of recent events, Walden said it might be prudent for General Assembly members to reevaluate their growth numbers. "It is too early to tell, but the projected numbers may need to be revised downward," Walden said.

Tad Boggs, director of public affairs for the N.C. Department of Commerce, said losses in the airline industry have sent an economic shock wave through the state. Midway Airlines recently announced the closing of its hub at Raleigh-Durham International Airport. U.S. Airways is considering downsizing 8,900 jobs in the Charlotte area.

"The main thing you have to remember is that 10 days ago no one would have guessed that Midway Airlines would be gone or that U. S. Airways would be considering eliminating half of its employees in Charlotte," Boggs said.

He said state exports have remained stable.

Jerry Hostetter, vice president of Smithfield Food, said the North Carolina-based company is conducting business as usual. "Our stock was down a few cents at the close yesterday," said Hostetter. "But it was actually up 20 cents earlier in the day."

Hostetter said the outlook for his company is good and that growth can be expected even if the U.S. goes to war.

"Food stocks are considered defensive stocks. Investors would typically tend to buy those stocks in times of uncertainty."

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